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.Chie Mihara Ameno# - Sandals - Women Chie Mihara Sandals online on YOOX United Kingdom - 11430213JNClarks Ankle Boot - Women Clarks Ankle Boots online on YOOX United Kingdom - 11480279TB , Sgn Giancarlo Paoli Ankle Boot - Women Sgn Giancarlo Paoli Ankle Boots online on YOOX United Kingdom - 11474649LLAgl Attilio Giusti Leombruni Loafers - Women Agl Attilio Giusti Leombruni Loafers online on YOOX United Kingdom - 11555098RE , Ovye' By Cristina Lucchi Sandals - Women Ovye' By Cristina Lucchi Sandals online on YOOX United Kingdom - 11563871KRVans Ua Classic Slip-On (Gum Block) - Sneakers - Men Vans Sneakers online on YOOX United Kingdom - 11559779FJ , Juli Pascal Paris Loafers - Women Juli Pascal Paris Loafers online on YOOX United Kingdom - 11456044PB , Women's Jimmy Choo Champagne Silver Sandals Authentic guaranteePuma Black Vikky Mid Fp Sneakers SneakersCalvin Klein Jeans SOLE - Wedge boots , man/woman Aquatalia Hayden Boots Good design , mens/womens River Island Slip-ons Colour: tan Preferred material , Adidas Office FLASHLIGHT - Slip-ons - black , L37 GOLD RING - Classic ankle boots Colour: black , Birkenstock MADRID - Mules Colour: pull up stoneHogan Boots - Women Hogan Boots online on YOOX United Kingdom - 11283769XK , Buscemi Sneakers - Men Buscemi Sneakers online on YOOX United Kingdom - 11127947DCman/woman Hush Puppies Cherish Gwen Sneakers & Athletic Hush Puppies Authentic guaranteeman/woman Calvin Klein Janie Sneakers & Athletic Calvin Klein Attractive and durable , Tommy Jeans METALLIC WEDGE SANDAL - High heeled sandals Colour: rose gold , Red(V) Court - Women Red(V) Courts online on YOOX United Kingdom - 11489064BI , Oscar Tiye Court - Women Oscar Tiye Courts online on YOOX United Kingdom - 11562612WW , Chiara Ferragni Boots - Women Chiara Ferragni Boots online on YOOX United Kingdom - 11536420FK , N° 21 Sandals - Women N° 21 Sandals online on YOOX United Kingdom - 11154852MB , MISS Ruthie Davis Purple/Grey/Black Platforms tender9l80yX5q Marsell Cassapara Reverse Leather Boot , Easy to use Donald J Pliner Gaio , Sales Italy Patricia Green Barrie , Sufficient supply Frye Cavalry 12L , Ladies Christian Louboutin Louis Orlate Sneakers bestsell
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.