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.Andìa Fora Ankle Boot - Women Andìa Fora Ankle Boots online on YOOX United Kingdom - 11531523WF , Carvani Ankle Boot - Women Carvani Ankle Boots online on YOOX United Kingdom - 11503893DMCDOUX 7987 FASHION LOAFERS FOR WOMEN , Tory Burch Brown Logo Leather SandalsSmash Leather Men's Sneakers | white-black-whiteTSUGI Jun Baroque Sneakers | Puma White-Puma White | PUMA Lows | PUMA United States , Palomitas By Paloma Barceló Espadrilles - Women Palomitas By Paloma Barceló Espadrilles online on YOOX United Kingdom - 11272031ME , The Last Conspiracy Ankle Boot - Women The Last Conspiracy Ankle Boots online on YOOX United Kingdom - 11092967VGPANAMA JACK Dori Run B5 Napa Rojo SANDALIA PLANA DE MUJERCLARKS Money Whistle FASHION ANKLE BOOTS FOR WOMENKAPPA 303xwh0 Speeder 929 Black TRAINERS FOR WOMEN , Puma EVOSPEED DISTANCE 7 - Spikes Colour: schwarz/neongelbKennel + Schmenger TARA - Slip-onsmen's/women's Munro Riley Boots Shopping promotion , Gioseppo Sneakers - Men Gioseppo Sneakers online on YOOX United Kingdom - 11574417SC , Mizuno Sneakers - Men Mizuno Sneakers online on YOOX United Kingdom - 11541893JTman/woman PUMA Basket Fierce EP Sneakers & Athletic PUMA Modern design , mens/womens Columbia Chimera Mesh Sneakers & Athletic Columbia Rich design , Arfango Court - Women Arfango Courts online on YOOX United Kingdom - 11393236EI , Solillas® Sandals - Women Solillas® Sandals online on YOOX United Kingdom - 11530084PJHogan Sneakers - Women Hogan Sneakers online on YOOX United Kingdom - 11567524FI , Spaziomoda Ankle Boot - Women Spaziomoda Ankle Boots online on YOOX United Kingdom - 11449235MU , woman Fendi Carioca Wedges settlement Price , iOs2ZETj Merrell Work Jungle Moc SR , Reef Stargazer Twinkle, twinkle little star . . . 'cause with Reef, you'll showcase your style no matter where you are! , WOMENS Ann Marino Black Formal Shoes Highly praised and appreciated by the audience of consumersTory Sport by Tory Burch White New Retro Chevron Leather Sneakers Flats Sneakers , MISS Valentino Nude Black Formal Shoes A balance between toughness and hardnessGolden Goose Deluxe Brand Silver and Black Superstar Low SneakersGolden Goose Deluxe Brand White/Gray Mid Star Sneaker Sneakers
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.