Billionaire Leon Cooperman advised investors on Wednesday to stay away from bonds as they are in a bubble.
“My world is cash and stocks. I think bonds are the bubble, not stocks,” Cooperman told CNBC’s “Halftime Report.” He also noted investors should buy stocks they see as “fundamentally cheap” after a recent decline in equities.
Cooperman’s comments come after the benchmark 10-year note yield rose to 3.261 percent last week, its highest level since 2011. The sharp rise in rates spooked investors across the globe, with world equities falling sharply last week.
The Federal Reserve dropped its overnight interest rates to zero in the aftermath of the financial crisis as it tried to jumpstart the U.S. economy. This pushed yields down to historical lows, thus sending bond prices higher and to levels that some investors like Cooperman say reached bubble proportions. Now the Fed is reversing these policies by rising interest rates and trimming its balance sheet. The central bank has already hiked rates three times this year and is forecast to raise them once more before year-end.
Investors were worried that a rise in rates would lead to higher borrowing costs and thus slow down the global economy.
Cooperman, the CEO of Omega Advisors, said the market can handle higher interest rates, however, as there are no signs of a recession looming.
“The economy, if anything, is too strong,” Cooperman said. “The economy is on fire … The conditions that normally lead to a big decline just aren’t present.”
Cooperman’s comments come as U.S. stocks try to recover from a 4.1 percent decline last week amid worries about higher rates, tech valuations and fears of a global economic slowdown.Donna Più Ankle Boot - Women Donna Più Ankle Boots online on YOOX United Kingdom - 11501457UO , Janet & Janet Boots - Women Janet & Janet Boots online on YOOX United Kingdom - 11480525MC , Dolce & Gabbana Sneakers - Men Dolce & Gabbana Sneakers online on YOOX United Kingdom - 11061963FS , P.A.R.O.S.H. Ankle Boot - Women P.A.R.O.S.H. Ankle Boots online on YOOX United Kingdom - 11055625CP , Gianvito Rossi Neutral Janis Suede Sandals , Twist & Tango Cologne Splip-In Bow - Open-Toe Mules - Women Twist & Tango Open-Toe Mules online on YOOX United Kingdom - 11469968AH , Plein Sport Lo-Top Sneakers Wide - Sneakers - Men Plein Sport Sneakers online on YOOX United Kingdom - 11406525AX , MARIA MARE 66240 C25750 Brush Negro FASHION SANDALS FOR WOMENwomen Tory Burch Filipa Espadrille Wedges Guarantee quality and quantitywoman Tory Burch Pink Equestrian Sandals Optimal pricewoman Prada Nude Patent Leather Sandals Most economicalGBBRAVO 5644 WEDGE ANKLE BOOTS FOR WOMEN , man/woman Sigerson Morrison Sheldon Flats stable qualityMen/Women Soludos Venetian Bootie Boots Order welcome , men/women Nina Meryly Heels Complete specifications , Ted Baker CAMHERI - Classic ankle boots - tan , men's/women's Cole Haan Yuliana Pump Heels Very good colormens/womens Jil Sander JS25155 Sneakers & Athletic Jil Sander Reliable reputationmen's/women's PUMA Mostro Fashio Sneakers & Athletic PUMA Elegant shapemens/womens Sanuk Dree Me Cruiser Sneakers & Athletic Sanuk Non-slip , mens/womens BOBS from SKECHERS Bobs Bohemian Heels Exquisite (processing) processing , En Avance Boots - Men En Avance Boots online on YOOX United Kingdom - 11503915SA , Vagabond Shoemakers Loafers - Men Vagabond Shoemakers Loafers online on YOOX United Kingdom - 11379253HJHogan Court - Women Hogan Courts online on YOOX United Kingdom - 11213008ILGrenson Sneakers - Women Grenson Sneakers online on YOOX United Kingdom - 11553881DP , Prezioso Court - Women Prezioso Courts online on YOOX United Kingdom - 11414770GWFitflop Flip Flops - Women Fitflop Flip Flops online on YOOX United Kingdom - 11494240AN , Strong value Johnston & Murphy Tara , Nike White New Air Jordan Son Of Mars Men Sneakers Sneakers , womens Rebecca Minkoff Black Bleeker Sneakers Primary quality
But Cooperman thinks stocks will bounce back from this decline as they are fairly valued. He also noted the market can handle higher interest rates.
“My central view is the market will be higher than it is today at year-end,” he said. “We’re in a zone of fair value and it’s going to take a recession or a change in the Fed’s posture” to get us out of that.