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.Annarita N. Ankle Boot - Women Annarita N. Ankle Boots online on YOOX United Kingdom - 11561634OXMen/Women KENDALL + KYLIE Juniper 2 Sneakers & Athletic KENDALL + KYLIE Fashion versatile shoes , Sperry Top-Sider Striper Ii Boat Washed - Loafers - Men Sperry Top-Sider Loafers online on YOOX United Kingdom - 11472295LMFOXY UP D58-872 Taupe FASHION FOOTWEAR FOR WOMEN , woman adidas Icy Pink Nmd_r1 Sneakers quality QueenMISS Prada Brown and Tan Platforms Cheapest , womens Chinese Laundry Black Sandals clearance saleladies Manolo Blahnik Slides Sandals Many styles , Pepe Jeans WADE - High-top trainers - blackKaty Perry THE CELINA - Classic heels Colour: spanish red , mens/womens Office SORINA - Mules good qualitymen/women Crocs Walu Canvas Loafer Loafers Brand feast , Men/Women Merrell Terrant Slide Sandals Fashion versatile shoesAdidas Shoe The Bear TRISH - Ankle boots - black , Nike Performance ZOOM TRAIN COMMAND - Sports shoes - monarch/white/blue force/orange pulse/signal blue , Hogan Court - Women Hogan Courts online on YOOX United Kingdom - 11301460JIKeys Ankle Boot - Women Keys Ankle Boots online on YOOX United Kingdom - 11553665MWNero Giardini Court - Women Nero Giardini Courts online on YOOX United Kingdom - 11562399ST , D.A.T.E. Originals Sneakers - Women D.A.T.E. Originals Sneakers online on YOOX United Kingdom - 11300754MJValentino Garavani Court - Women Valentino Garavani Courts online on YOOX United Kingdom - 11451805NMMarco Barbabella Court - Women Marco Barbabella Courts online on YOOX United Kingdom - 11342214FG , Tory Burch White Doris Slide Sandalsp93KjKpJ Under Armour UA HOVR® Sonic , Excellent quality Sergio Rossi A77990-MNAN07 , DC Vestrey Take on your favorite skate spots in clean style with the fresh DC Vestrey shoe!Nike Black/Green Free Tr 5 Prt 704695-013 Women's Training Sneakers Sneakers , MISS Madeline Black Attitude Platforms Big clearance saleLADY Nike Lunarepic Flynit Running Sneakers Lush designLadies Alexander Wang Evelin Hh Sandals Immediate delivery , WOMEN Zara Silver Star Shiny Sandals Reliable reputation
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.