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.John Richmond Ankle Boot - Women John Richmond Ankle Boots online on YOOX United Kingdom - 11060820JOPretty Ballerinas Ankle Boot - Women Pretty Ballerinas Ankle Boots online on YOOX United Kingdom - 11309506XS , Dolce & Gabbana Sneakers - Women Dolce & Gabbana Sneakers online on YOOX United Kingdom - 11220392HE , Dolce & Gabbana Sneakers - Men Dolce & Gabbana Sneakers online on YOOX United Kingdom - 11339811FVGusto Ankle Boot - Women Gusto Ankle Boots online on YOOX United Kingdom - 11520378QB , Caterpillar Device Waterproof Composite Safety Toe , Ovye' By Cristina Lucchi Espadrilles - Women Ovye' By Cristina Lucchi Espadrilles online on YOOX United Kingdom - 11563359AG , Ladies SCHUTZ Snow Leopard Sneaker Sneakers Different styles , LADY Valentino Pink Velvet Bow-heel Sandals Perfect workmanship , lady Manolo Blahnik Gray Hangisi Pumps Modern , Adidas New Balance WS247 - Trainers - light grey , men's/women's Dirty Laundry Buttermilk Smooth Sandals Fashion versatile shoesD carey a leather ballet pump , taupe, Geox , Columbia CALDORADO II - Trail running shoesadidas Originals JAKE BOOT 2.0 - High-top trainersmen's/women's Donald J Pliner Bondi Sandals Beautiful color , Tod's Loafers - Women Tod's Loafers online on YOOX United Kingdom - 11306016WJMoma Boots - Men Moma Boots online on YOOX United Kingdom - 11516651TI , Bottega Marchigiana Sneakers - Men Bottega Marchigiana Sneakers online on YOOX United Kingdom - 11542382RU , Prada Sport Sneakers - Men Prada Sport Sneakers online on YOOX United Kingdom - 11523117WQCapitini Court - Women Capitini Courts online on YOOX United Kingdom - 11549393EFRochas Sandals - Women Rochas Sandals online on YOOX United Kingdom - 11167958DP , Rochas Court - Women Rochas Courts online on YOOX United Kingdom - 11422685TR , Leather Crown Sneakers - Women Leather Crown Sneakers online on YOOX United Kingdom - 11505031DJSergio Rossi Sandals - Women Sergio Rossi Sandals online on YOOX United Kingdom - 11285275EI , Karl Lagerfeld Sneakers - Women Karl Lagerfeld Sneakers online on YOOX United Kingdom - 11497391SUErmenegildo Zegna Loafers - Men Ermenegildo Zegna Loafers online on YOOX United Kingdom - 11518827XK , xolVT2nn ECCO Sport Exostrike GORE-TEX High , woman Nine West Multi-colored Na Wedges Sufficient supply , MISS Prada Blue Espadrilles Platforms Customer first
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.