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.Creative Recreation CESARIO LO XVI White / Blue / Cube , Nike Air Max 95 Premium - Sneakers - Men Nike Sneakers online on YOOX United Kingdom - 11539705PBman/woman PUMA Muse Slip-On July Sneakers & Athletic PUMA Highly praised and appreciated by the consumer audience , MTNG 50085 Bahama C1578 Negro PLATFORM SANDALS FOR WOMEN , Lilly Pulitzer Navy with Diamonds Newport Wedge Sandals , WOMEN Jimmy Choo Off White Platforms luxuryman/woman Touch Ups Priscilla Heels Perfect processingGweneth lu trainers , light grey, Esprit , Lazamani Classic ankle boots Colour: green , KIOMI High heeled ankle boots , men's/women's Franco Sarto Sela Clogs & Mules Pleasant appearanceCrocs CROCBAND FLIP - Pool shoes - blackmens/womens Naturalizer Demi Wide Calf Boots special promotion , men's/women's Dr. Martens 1490 Stud Boots Clearance sale , Converse Sneakers - Men Converse Sneakers online on YOOX United Kingdom - 11570324NJ , Moschino Sneakers - Men Moschino Sneakers online on YOOX United Kingdom - 11493241AM , Lumberjack Loafers - Men Lumberjack Loafers online on YOOX United Kingdom - 11559073XGmen/women Frye Owen Gore Sneakers & Athletic Frye Sufficient supplymen's/women's Supra Chino Court Sneakers & Athletic Supra Various goods , Hundred 100 Boots - Men Hundred 100 Boots online on YOOX United Kingdom - 11516510EGAudley Sandals - Women Audley Sandals online on YOOX United Kingdom - 11138480GI , Laura Bellariva Sneakers - Women Laura Bellariva Sneakers online on YOOX United Kingdom - 11546212PALoriblu Ankle Boot - Women Loriblu Ankle Boots online on YOOX United Kingdom - 11521524ARAlaïa Ballet Flats - Women Alaïa Ballet Flats online on YOOX United Kingdom - 11503509SW , z28OeQ1e Free People Twin Falls LoafernxJZImtB Vans Old Skool Core ClassicsExcellent stretching ASICS GEL-Cumulus 20Prada Ivory Patent Leather Pointed Toe Slingback Heel Geometric Perforation M Sandals , Women's Christian Louboutin Pink Cataclou Wedges From the latest modelwoman Modern Vintage Ivory Strap Wedges German Outlets ,
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.