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.J|D Julie Dee Boots - Women J|D Julie Dee Boots online on YOOX United Kingdom - 11482891GM , Rick Owens Ankle Boot - Women Rick Owens Ankle Boots online on YOOX United Kingdom - 11475488HW , Saucony Jazz O - Sneakers - Men Saucony Sneakers online on YOOX United Kingdom - 11340774XR , Alexander Smith Sneakers - Women Alexander Smith Sneakers online on YOOX United Kingdom - 11501125PL , Christian Louboutin Black Roller Boat SneakersMARIA MARE 66710 C32728 Lizard Negro FASHION SANDALS FOR WOMENMISS Banana Republic Green Flower Sandals Economical and practical , Sperry Gold Sport Casual TN w/ ASVChristian Louboutin Taupe Grosgrain Ribbon Wedge Sandals , See by Chloé GLYN - Espadrilles Colour: nero , man/woman Crocs Yukon Mesa Slide Sandals Affordable , Adidas Massimo Dutti Classic heels - black , Marni Boots - Women Marni Boots online on YOOX United Kingdom - 11481068PR , man/woman Steve Madden Evann Sneakers & Athletic Steve Madden Characteristics , men/women Nike Zoom Winflo 2 Sneakers & Athletic Nike Guarantee quality and quantity , man/woman New Balance Classics MS574 Sneakers & Athletic New Balance Classics Best-selling worldwide , Grandinetti Sandals - Women Grandinetti Sandals online on YOOX United Kingdom - 11460748JQ , Vans Sneakers - Women Vans Sneakers online on YOOX United Kingdom - 11494938JS , Panella Sandals - Women Panella Sandals online on YOOX United Kingdom - 11474309LXCamper Court - Women Camper Courts online on YOOX United Kingdom - 11555840AQPuma Sneakers - Women Puma Sneakers online on YOOX United Kingdom - 11315408CKBikkembergs Ankle Boot - Women Bikkembergs Ankle Boots online on YOOX United Kingdom - 11517538DM , Casadei Ankle Boot - Women Casadei Ankle Boots online on YOOX United Kingdom - 11309070FU , Gianna Meliani Court - Women Gianna Meliani Courts online on YOOX United Kingdom - 11507305PBDkny Ankle Boot - Women Dkny Ankle Boots online on YOOX United Kingdom - 11557521ANEl Campero Boots - Women El Campero Boots online on YOOX United Kingdom - 11544186DHJohn Richmond Sneakers - Women John Richmond Sneakers online on YOOX United Kingdom - 11403186CEm3i952ho Ariat Heritage IV Zip PaddockpEREE2Ut SKECHERS 23562 SLIPPER PARA MUJERDonald J. Pliner Red Multi Couture Thong Butterfly Sandals ,
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.