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.Sweet Shoes Ballet Flats - Women Sweet Shoes Ballet Flats online on YOOX United Kingdom - 11261221SGL' Autre Chose Sandals - Women L' Autre Chose Sandals online on YOOX United Kingdom - 11169054RF , ( Verba ) Loafers - Men ( Verba ) Loafers online on YOOX United Kingdom - 11487740DEFila White Smokescreen Low Sneakers SneakersSalvatore Ferragamo Burgundy Clenda 0478713 Sandals , Valentino Rockstud Kitten Heels Eu38.5 PumpsNew Balance Wl373 Suede/Textile - Sneakers - Women New Balance Sneakers online on YOOX United Kingdom - 11554219CTMarc by Marc Jacobs Blue Grey Bolla SneakersVERONA 10258 Azul FASHION FOOTWEAR FOR WOMENRoger Vivier New Women Slide Heels Sandals , New Look STICKED - High heeled sandalsMen/Women Giuseppe Zanotti E800040 Heels reliable qualityAdidas Vagabond CARY - Ankle boots - blackLumberjack Boots - Men Lumberjack Boots online on YOOX United Kingdom - 11517322WA , Moma Boots - Men Moma Boots online on YOOX United Kingdom - 11516589MQmens/womens Jil Sander Navy JN28089 Oxfords a good reputation in the world , Gianfranco Lattanzi Sneakers - Men Gianfranco Lattanzi Sneakers online on YOOX United Kingdom - 11453869HT , Bikkembergs Loafers - Women Bikkembergs Loafers online on YOOX United Kingdom - 11450789CW , Deimille Court - Women Deimille Courts online on YOOX United Kingdom - 11561968XFManufacture D'essai Sandals - Women Manufacture D'essai Sandals online on YOOX United Kingdom - 11495578AFDkny Ballet Flats - Women Dkny Ballet Flats online on YOOX United Kingdom - 11472584LB , Newbark Ballet Flats - Women Newbark Ballet Flats online on YOOX United Kingdom - 44888298BVSwedish Hasbeens Sandals - Women Swedish Hasbeens Sandals online on YOOX United Kingdom - 11458254LA , Royal Republiq Boots - Men Royal Republiq Boots online on YOOX United Kingdom - 11319693SENike Mens Air Max New SneakersBreathable shoes Clarks Maypearl EdieThe first batch of customers' comprehensive specifications PUMA Tishatsu Runner , Hermès Tan Nude Leather Wood Block Platform Heel Buckle Slide M Sandals , Tory Burch Natural/ Snake Print Mira SandalsMISS Stuart Weitzman Pink Suede Sandals economy
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.