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.Fabio Rusconi Boots - Women Fabio Rusconi Boots online on YOOX United Kingdom - 11532478PD , KING SUEDE LEGENDS | Puma Black-Vibrant OrangeLiu ?Jo Shoes Ballet Flats - Women Liu ?Jo Shoes Ballet Flats online on YOOX United Kingdom - 11029834HXJanet & Janet Court - Women Janet & Janet Courts online on YOOX United Kingdom - 11532023MV , THIERRY RABOTIN 719 Mn ZAPATO DE CU?A PARA MUJER , Prada Gold Sport Patent Leather T-strap 38 Sandalswomens Tory Burch Flip Flop Sandals special purchase , CLARKS Medora Grace BOTíN PLANO DE MUJERSTROVER 3519 ZAPATO DE SALóN PARA MUJERmen's/women's David Tate Dixie Heels Sales Italy , man/woman Deer Stags Hampden Oxfords Excellent qualityOpening Ceremony Kim Over The Knee Bootman/woman Aquatalia Stefania Boots Caramel, gentle , Wedge espadrilles with rope tie , striped navy, Anne Weyburnmen's/women's John Varvatos Waverly Zip Boot Boots stable quality , O.X.S. Boots - Men O.X.S. Boots online on YOOX United Kingdom - 11507858JKCorvari Loafers - Men Corvari Loafers online on YOOX United Kingdom - 11173847XL , Men/Women Superga 2388 Leaw Sneakers & Athletic Superga Moderate costNew Balance Sneakers - Men New Balance Sneakers online on YOOX United Kingdom - 11465532TLAdidas Lost Ink JEN SETBACK TONALSTILETTO - High heeled ankle boots - black , men/women ASICS GEL-Flux 3 Sneakers & Athletic ASICS Ranked first in its classGuess Sneakers - Women Guess Sneakers online on YOOX United Kingdom - 11504539JISantoni Sandals - Women Santoni Sandals online on YOOX United Kingdom - 11542182QT , Tod's Loafers - Women Tod's Loafers online on YOOX United Kingdom - 11557994KC2Star Sneakers - Women 2Star Sneakers online on YOOX United Kingdom - 11453552SSSessun Ankle Boot - Women Sessun Ankle Boots online on YOOX United Kingdom - 11535682WMGuess Ballet Flats - Women Guess Ballet Flats online on YOOX United Kingdom - 11417757RKDm26 Ballet Flats - Women Dm26 Ballet Flats online on YOOX United Kingdom - 11455086QU , Extreme speed logistics Teva Encanta Slide , Dior Black Slingback J'adior Heels Us9 Pumps ,
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.