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.Police 883 Ankle Boot - Women Police 883 Ankle Boots online on YOOX United Kingdom - 11275900BKLaurence Dacade Ankle Boot - Women Laurence Dacade Ankle Boots online on YOOX United Kingdom - 11289814MP , Lena Milos Boots - Women Lena Milos Boots online on YOOX United Kingdom - 11520628CI , Wolverine Durashocks? Insulated Waterproof Wellington , womens Alexandre Birman Orange Platforms Discount , womens Saint Laurent 418026bt5302854 Sneakers On-line , Stephen Good London Ankle Boot - Women Stephen Good London Ankle Boots online on YOOX United Kingdom - 11454709EP , Adidas Originals Nmd_Cs2 Pk - Sneakers - Women Adidas Originals Sneakers online on YOOX United Kingdom - 11414650TGUP TO YOU 5000 Topo FASHION ANKLE BOOTS FOR WOMENladies Aerosoles Black Cyberspace Sandals Excellent valueMen/Women Touch Ups Reagan Heels Very practical , SOLE Active Thick + Met Padmen/women Charles by Charles David Perfect Boots Primary quality , man/woman Rockport Barrow Loft Banni Oxfords Elegant shape , Bikkembergs Sneakers - Men Bikkembergs Sneakers online on YOOX United Kingdom - 11232931PC , Adidas Tiger of Sweden DOLICHO - High heeled ankle boots - black , Men/Women Rocket Dog Joanel Sneakers & Athletic Rocket Dog Clever and practical , man/woman Nike Golf Explorer 2 Sneakers & Athletic Nike Golf Pleasant appearance , mens/womens Nike Dualtone Racer Sneakers & Athletic Nike High quality and cheapmens/womens Caterpillar Casual Harper Fur Waterproof Boots Carefully selected materialsMen/Women etnies Callicut LS Sneakers & Athletic etnies Brand feast , Starlet Court - Women Starlet Courts online on YOOX United Kingdom - 11494349XOPedro García Court - Women Pedro García Courts online on YOOX United Kingdom - 11519941UHEmanuela Passeri Court - Women Emanuela Passeri Courts online on YOOX United Kingdom - 11508430APJanet Sport Loafers - Women Janet Sport Loafers online on YOOX United Kingdom - 11532919MMHannibal Laguna Court - Women Hannibal Laguna Courts online on YOOX United Kingdom - 11541803CTLorenzo Mari Sandals - Women Lorenzo Mari Sandals online on YOOX United Kingdom - 11107238UTAma Brand Sneakers - Men Ama Brand Sneakers online on YOOX United Kingdom - 11510569PC , Louis, elaborate Nike Tanjun SE , ladies Saint Laurent Silver Tribute Sandals Elegant appearance ,
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.