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.Yosh Collection Ankle Boot - Women Yosh Collection Ankle Boots online on YOOX United Kingdom - 11222275SWWize & Ope Sneakers - Women Wize & Ope Sneakers online on YOOX United Kingdom - 11266488KB , Cuplé Ankle Boot - Women Cuplé Ankle Boots online on YOOX United Kingdom - 11541287XR , WOMEN Valentino Gold Sandals quality QueenMERCEDES AMG PETRONAS Motorsport Drift Cat 7 Sneakers | Black-White-Mercedes Tm Slvr | PUMA Mercedes AMG Petronas | PUMA United States , See By Chloé Ankle Boot - Women See By Chloé Ankle Boots online on YOOX United Kingdom - 44735122LJ , Jimmy Choo Silver Women's Metallic Morgan 65 Steel Mirror Leather Chunky Wi SandalsTwelfth St. by Cynthia Vincent Brown SandalsBOBS from SKECHERS Keepsakes High - Snow MagicLa Sportiva TX2 - Climbing shoesPolo Ralph Lauren CAMILO - Trainers - navy/varsity golMen/Women Vince Norris Sneakers & Athletic Vince Fashion dynamicKeen NEWPORT H2 - Walking sandals Colour: navy/medium greymen's/women's Even&Odd VEGAN - Espadrilles businessButtero® Sneakers - Men Buttero® Sneakers online on YOOX United Kingdom - 11467725XB , Men/Women Circus by Sam Edelman Bice Sandals Strong heat and heat resistance , mens/womens bernie mev. Rigged Jim Sneakers & Athletic bernie mev. durability , Adidas Clarks ORINOCO HOT - Classic ankle boots - taupeNew Look Wide Fit WIDE FIT ZEE - Sandals Colour: blackRoberto Cavalli Sneakers - Men Roberto Cavalli Sneakers online on YOOX United Kingdom - 11577211NL , Apepazza Sneakers - Women Apepazza Sneakers online on YOOX United Kingdom - 11460687CWSebastian Court - Women Sebastian Courts online on YOOX United Kingdom - 11517679LRLerre Court - Women Lerre Courts online on YOOX United Kingdom - 11515312SDRockport Sneakers - Women Rockport Sneakers online on YOOX United Kingdom - 11509281JUN° 21 Loafers - Women N° 21 Loafers online on YOOX United Kingdom - 11515877FOModern and elegant Steve Madden RallieLADY Green Vintage Mezzo Formal Shoes Quality and quantity guaranteedLADY Manolo Blahnik Black Slides Sandals Reliable reputation , Charlotte Olympia Bubblegum Alexa Rubber Wedge Sandals , WOMEN Jimmy Choo Silver Flats Sandals Queensland
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.