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.Laurence Dacade Ankle Boot - Women Laurence Dacade Ankle Boots online on YOOX United Kingdom - 11475728GD , men's/women's inov-8 Fastlift 370 BOA Sneakers & Athletic inov-8 a good reputation in the worldRS-0 SOUND Women's Sneakers | Black-Black-ShockingOrange | PUMA RS-0 | PUMA United StatesMoa Master Of Arts Sneakers - Men Moa Master Of Arts Sneakers online on YOOX United Kingdom - 11532189PK , Jean-Michel Cazabat Black Cream Brown Wedge Heel Sandals , Lindsay Phillips Gold Sharyn Slide Snap 7006 Sandalswomens Via Spiga Silver Formal Shoes Optimal price , woman Tory Burch Gold Elizabeth Sandals Fair price , Converse Chuck Taylor® All Star® Leather HiALBANO 8001-albano ZAPATO DE SALóN PARA MUJER , WOMEN Vince Camuto Blue Ryssa Wedges QueenslandWOMENS Dior White/Pink Monogrammed Sandals Comfortable touchmen/women Shoot Trainers High-quality materials , mens/womens Columbia Heavenly Omni-Heat Boots Excellent function , mens/womens Onex Harriet Sandals good quality , men/women Bostonian Hazlet Step Loafers Easy to clean surfaceMen/Women Sperry A/O 2-Eye Raincoat Boat Sperry Preferred boutiqueQuattrobarradodici Sneakers - Men Quattrobarradodici Sneakers online on YOOX United Kingdom - 11573405LWPuma RED BULL RACING CUPS LO BULLS - Trainers Colour: white/night sky , mens/womens ASICS Gel-Excite? 3 Sneakers & Athletic ASICS Comfortable and natural , men's/women's Aetrex Essence Adele Boots A balance between toughness and hardnessAndroid Homme Sneakers - Men Android Homme Sneakers online on YOOX United Kingdom - 11316115RF , Sebastian Espadrilles - Women Sebastian Espadrilles online on YOOX United Kingdom - 11562476ND , Malìparmi Ankle Boot - Women Malìparmi Ankle Boots online on YOOX United Kingdom - 11527917RRMira Mikati Sandals - Women Mira Mikati Sandals online on YOOX United Kingdom - 11544825MW , Schutz Ankle Boot - Women Schutz Ankle Boots online on YOOX United Kingdom - 11583464RMSkechers Gray Knitted Golf Sneakers Sneakers , First batch of customers Massimo Matteo Formal Slip-OnWOMENS Tory Burch Black/Ivory Ray Sandals Online export business , Eileen Fisher Black Stretch Two Piece Knit Sandals ,
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.