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.Nike Air Vapormax Plus - Sneakers - Men Nike Sneakers online on YOOX United Kingdom - 11497457KQEbarrito Ankle Boot - Women Ebarrito Ankle Boots online on YOOX United Kingdom - 11537659BJ , Bueno Ankle Boot - Women Bueno Ankle Boots online on YOOX United Kingdom - 11455062VM , Keen Utility Redding Aluminum Toe ESDThe Last Conspiracy Ankle Boot - Women The Last Conspiracy Ankle Boots online on YOOX United Kingdom - 11549399GKO6 The Gold Edition Court - Women O6 The Gold Edition Courts online on YOOX United Kingdom - 11464040GQ , Adidas By Raf Simons Sneakers - Men Adidas By Raf Simons Sneakers online on YOOX United Kingdom - 11269605RDTory Burch Hicks Garden Tatiana Nayan Brocade Pearls Slide 45mm #41734 Sandalswomen Burberry Black/Nova Check Black/Nova Wedges New design , JOHN SMITH Rimcados Fucsia SLIP-ON PARA MUJER , man/woman Jack Rogers Nora Heels Fine artEverybody Classic ankle boots Colour: delice neroflip*flop POOL METALLIC CRACKED - MulesNike Sportswear KAWA SHOWER - Pool sliders - black/white , LK Bennett HELENA - High heeled sandals Colour: soft gold , men/women Camper ORUGA - Sandals Packaging diversity , Nike Sneakers - Men Nike Sneakers online on YOOX United Kingdom - 11481030IEImac Boots - Men Imac Boots online on YOOX United Kingdom - 11551574HLDune | Dune Two Part Block Heel Scalloped Leather Sandal in BlushNew Look Wide Fit WIDE FIT DUDE - Ankle boots Colour: stone , Men/Women another project Boots Colour: black Year-end special promotionsPiumi Court - Women Piumi Courts online on YOOX United Kingdom - 11457967HQ , Garrice Loafers - Women Garrice Loafers online on YOOX United Kingdom - 11559806BI , Kanna Sandals - Women Kanna Sandals online on YOOX United Kingdom - 11456846IU , Ash Sneakers - Women Ash Sneakers online on YOOX United Kingdom - 11443706TRSax Ballet Flats - Women Sax Ballet Flats online on YOOX United Kingdom - 11484240AUPinko Open-Toe Mules - Women Pinko Open-Toe Mules online on YOOX United Kingdom - 11513756MRVince Nude Blush Marett Platform SandalsrcqRB4um Onitsuka Tiger by Asics GSMWomen's Valentino Multicolor Formal Shoes Different products ,
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.