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.Mercante Di Fiori Court - Women Mercante Di Fiori Courts online on YOOX United Kingdom - 11467383RP , Tory Burch Ballet Flats - Women Tory Burch Ballet Flats online on YOOX United Kingdom - 11475706DKThe Last Conspiracy Sneakers - Men The Last Conspiracy Sneakers online on YOOX United Kingdom - 11518178JI , Tila March Sandals - Women Tila March Sandals online on YOOX United Kingdom - 11531551SA , PORRONET 2433 WEDGE-HEEL ESPADRILLES FOR WOMEN , FT1prw8A Men/Women Joie Oki Heels newConverse ALL STAR LEATHER HI Black181 By Alberto Gozzi Loafers - Women 181 By Alberto Gozzi Loafers online on YOOX United Kingdom - 11536232RB , CHACAL 3653 FASHION ANKLE BOOTS FOR WOMEN , womens Roxy White A457134 Pk Sneakers luxury , mens/womens Nine West Maisie Heels Special purchaseAdidas Tamaris Slip-ons - black matt , Miss Selfridge CLOSED TOE - Platform sandals Colour: blue , mens/womens Lucky Brand Blythh 2 Clogs & Mules economic , Brenda Zaro BIBI - High heeled boots Colour: nero , Geremia Loafers - Men Geremia Loafers online on YOOX United Kingdom - 44959548BH , Bikkembergs Boots - Men Bikkembergs Boots online on YOOX United Kingdom - 11520722JT , Antony Morato Boots - Men Antony Morato Boots online on YOOX United Kingdom - 11506213HABarleycorn Sneakers - Women Barleycorn Sneakers online on YOOX United Kingdom - 11479228OW , Dsquared2 Sandals - Women Dsquared2 Sandals online on YOOX United Kingdom - 11428241AV , Charlotte Olympia Court - Women Charlotte Olympia Courts online on YOOX United Kingdom - 11546307XRValentino Garavani Sandals - Women Valentino Garavani Sandals online on YOOX United Kingdom - 11306965FPCuplé Ankle Boot - Women Cuplé Ankle Boots online on YOOX United Kingdom - 11573699DU , Quality products Taos Footwear Ta Dah , Bella-Vita Fitz It's all about the intricate details with the simply chic Fitz sandal by Bella-Vita!Giuseppe Zanotti Black * Patent Leather Gold Buckle Sandals , woman Christian Louboutin Wh01 3141242 Pumps The newest style , WOMEN Birkenstock White Birkis Sandals Orders are welcome , Tory Burch Navy/White/Laguna Sawtooth Logo Sneaker SneakersTory Burch Black Miller Patent Leather 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.