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.( Verba ) Loafers - Women ( Verba ) Loafers online on YOOX United Kingdom - 11504493FP , Stuart Weitzman Ankle Boot - Women Stuart Weitzman Ankle Boots online on YOOX United Kingdom - 11506865PD , Marc Ellis Ankle Boot - Women Marc Ellis Ankle Boots online on YOOX United Kingdom - 11517666EFRoberto Del Carlo Sandals - Women Roberto Del Carlo Sandals online on YOOX United Kingdom - 11425252HK , F.Lli Bruglia Loafers - Women F.Lli Bruglia Loafers online on YOOX United Kingdom - 11517822EFConverse Cons Auckland Racer Ox Wrinkle Nylon/Suede Distressed - Sneakers - Men Converse Cons Sneakers online on YOOX United Kingdom - 11216598BM , Johnston & Murphy Waterproof XC4® Hollis Moc Casual Oxford , Ladies Air Jordan Crimson 3's Sneakers Very good colorwomens Saint Laurent Light Gold Sandals in short supplyDUNLOP 35318 06 Blanco LOW-TOP TRAINERS FOR WOMEN , WOMENS Valentino Silver/Grey Rockstuds Sneakers Sneakers special offer , lady Steve Madden Black Realove Sandals Different styles , Puma IGNITE LIMITLESS 2 - Trainers , Bianco MULE - Sandals From , Men/Women ALDO Sigrun-R Sneakers & Athletic ALDO buy online , Dr. Martens EMMELINE - Ankle boots Colour: cherry red , mens/womens CAFèNOIR Slip-ons Colour: nero Aesthetic appearanceD.A.T.E. Sneakers - Men D.A.T.E. Sneakers online on YOOX United Kingdom - 11556759FVManuel Ritz Sneakers - Men Manuel Ritz Sneakers online on YOOX United Kingdom - 11284541IWHenderson Sneakers - Women Henderson Sneakers online on YOOX United Kingdom - 11452280FTGarrice Sandals - Women Garrice Sandals online on YOOX United Kingdom - 11560017SI , Paolina Perez Boots - Women Paolina Perez Boots online on YOOX United Kingdom - 11533942PH , Divine Follie Sandals - Women Divine Follie Sandals online on YOOX United Kingdom - 11570964KMLoretta Pettinari Sandals - Women Loretta Pettinari Sandals online on YOOX United Kingdom - 11389938OO , Dolce&Gabbana Black Dolce & Gabbana Sneakerswomens J.Crew Formal Shoes Comfortable touch , Let our products go to the world Think! Julia - 82767Let our goods go to the world adidas Outdoor Caprockwomens Stephane Kelian Black Leather Sandals Fashion , MISS Tory Burch Caramel Phoebe Sandals uppers
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.