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.Lo.White Ankle Boot - Women Lo.White Ankle Boots online on YOOX United Kingdom - 11518380EK , Salvatore Ferragamo Nude Leather Heels Sandals , ladies Prada Black/Purple Color Sandals Affordable , 3.1 Phillip Lim Open-Toe Mules - Women 3.1 Phillip Lim Open-Toe Mules online on YOOX United Kingdom - 11439680TL , WOMEN Christian Louboutin Grey Platforms Win highly appreciated , Stuart Weitzman Toffee Vecchio Nappa Circular Sandalslady L.A.M.B. White Chunky Sandals Sale Italy , men/women Aquatalia Daniella Boots Reliable reputation , adidas Performance ADIPOWER WEIGHTLIFT - Sports shoes Colour: trace cargo , P448 Sneakers - Men P448 Sneakers online on YOOX United Kingdom - 11551280GLmens/womens UNIONBAY Park Sneakers & Athletic UNIONBAY The color is very eye-catchingmen's/women's adidas Outdoor Terrex Agravic Sneakers & Athletic adidas Outdoor Modern design , man/woman KIOMI High heels Colour: black Selling new productsman/woman Nine West Halenia 3 Heels Elegant and sturdy packaging , men's/women's Clarks Tri Camilla Sneakers & Athletic Clarks Fine workmanshipJerold Wilton Loafers - Men Jerold Wilton Loafers online on YOOX United Kingdom - 11480446WB , Diadora Tokyo - Sneakers - Men Diadora Sneakers online on YOOX United Kingdom - 11573810PPEleventy Sneakers - Women Eleventy Sneakers online on YOOX United Kingdom - 11467824SRGuess Sneakers - Women Guess Sneakers online on YOOX United Kingdom - 11519714IT , Zoe Ankle Boot - Women Zoe Ankle Boots online on YOOX United Kingdom - 11511805SRStella Luna Boots - Women Stella Luna Boots online on YOOX United Kingdom - 11539406SPLoretta Pettinari Loafers - Women Loretta Pettinari Loafers online on YOOX United Kingdom - 11492274UU , OcYVRi4j Dirty Laundry Pippa Platform SandalOutstanding function GEOX U843qb LOW-TOP TRAINERS , Win the praise of customers Loeffler Randall CocoImmediate delivery Stuart Weitzman VerukaChristian Louboutin Black Pik Roller Boat Spiked Skate Sneakers Sneakers , Pink Hi-top & Grey Logo /Us Toddler Sneakers , French Connection Black Harmoney Ankle-strap Gladiator Sandals , womens Valentino Pink Bow Platforms Famous store ,
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.