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.Liu ?Jo Shoes Sandals - Women Liu ?Jo Shoes Sandals online on YOOX United Kingdom - 44954902XL , Rizzoli Calzature Sandals - Women Rizzoli Calzature Sandals online on YOOX United Kingdom - 11506435INReebok Dmx Fusion Faded - Sneakers - Women Reebok Sneakers online on YOOX United Kingdom - 11495277PCCalpierre Ankle Boot - Women Calpierre Ankle Boots online on YOOX United Kingdom - 11458931UUadidas Outdoor Terrex AX2R Beta CW , Liu •Jo Shoes Ballet Flats - Women Liu •Jo Shoes Ballet Flats online on YOOX United Kingdom - 11015632NNKatie Grand Loves Hogan Sneakers - Women Katie Grand Loves Hogan Sneakers online on YOOX United Kingdom - 11335656JMMinnetonka Thunderbird Ii - Smooth - Loafers - Women Minnetonka Loafers online on YOOX United Kingdom - 11227542MB , MISS Melissa Black with White Wedges Economical and practical , Fendi Grey Zucca Print Canvas Sneakers 9.5/40 SneakersWOMENS Nina Gunmetal/Bronze Nadette Ava Sandals Long-term reputation , Franco Sarto Tan Suede Fiera Heels Sandals , Adidas Dune London BRIONEY - High heels - blueman/woman FLY LONDON EGAL847FLY Sandals King of the crowd , man/woman Dr. Martens Lyme Chelsea Boot Boots Long-term reputationman/woman Aquatalia Sebastian Loafers High quality and economy , Superga® Sneakers - Men Superga® Sneakers online on YOOX United Kingdom - 11571417MFMizuno Sneakers - Men Mizuno Sneakers online on YOOX United Kingdom - 11541893JTMen/Women Sol Sana Mickey Slip-On Sneakers & Athletic Sol Sana excellent , Pretty Ballerinas ANGELIS - Ballet pumps Colour: angela leta tela blue , Prada Sport Sneakers - Men Prada Sport Sneakers online on YOOX United Kingdom - 11466142TXDiesel Sneakers - Women Diesel Sneakers online on YOOX United Kingdom - 11476602XSHogan Sneakers - Women Hogan Sneakers online on YOOX United Kingdom - 11435476JWMjus Ankle Boot - Women Mjus Ankle Boots online on YOOX United Kingdom - 11485637DAO'dan Li Court - Women O'dan Li Courts online on YOOX United Kingdom - 11547468OOSartori Gold Loafers - Men Sartori Gold Loafers online on YOOX United Kingdom - 11481281NSladies Brown Cloud Platforms New stylecS4nsl1I Ancient Greek Sandals Thais Bow , womens Jack Rogers Black Willow Sandals Charming designwomens Nike Turquoise/ Blue Sneakers Reliable reputation ,
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.