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.Vic Matiē Ankle Boot - Women Vic Matiē Ankle Boots online on YOOX United Kingdom - 11457533CXColors Of California Sandals - Women Colors Of California Sandals online on YOOX United Kingdom - 11456799DF , Sergio Rossi Ankle Boot - Women Sergio Rossi Ankle Boots online on YOOX United Kingdom - 11355553ENSalvador Ribes Sandals - Women Salvador Ribes Sandals online on YOOX United Kingdom - 11104154WDF.Lli Bruglia Court - Women F.Lli Bruglia Courts online on YOOX United Kingdom - 11517810MATed Baker BLY 9 blackGiorgia B. Ankle Boot - Women Giorgia B. Ankle Boots online on YOOX United Kingdom - 11502802NUSteve Madden Black and White Heels Sandals , mens/womens Marsell Metallic Wedge Heels Online ShoppingOxitaly SAVANA - Boots Colour: positano neroWallis CORONA - Classic heelsAdidas ALDO TIRESA - High heeled sandals - blackAdidas Intentionally Blank NATHAN - Ankle boots - black , Panama Jack GIORDANA IGLOO TRAVELLING - Ankle bootsmen's/women's Giuseppe Zanotti Tyson Oxford Oxfords Excellent stretchingPrimabase Sneakers - Men Primabase Sneakers online on YOOX United Kingdom - 11385657ED , Diemme Sneakers - Men Diemme Sneakers online on YOOX United Kingdom - 11500513MRLumberjack Loafers - Men Lumberjack Loafers online on YOOX United Kingdom - 11454823MOConverse | Converse Chuck Taylor All Star '70 Hi Sneakers In Parchment 162053CMen/Women Lugz Centrum 2 Sneakers & Athletic Lugz professional designMen/Women SKECHERS Bikers - Expressway Loafers Let our products go to the world , Schutz Sandals - Women Schutz Sandals online on YOOX United Kingdom - 11482686QN , Sebastian Ankle Boot - Women Sebastian Ankle Boots online on YOOX United Kingdom - 11445843JDVoile Blanche Sneakers - Women Voile Blanche Sneakers online on YOOX United Kingdom - 11378124QV , Highly appreciated and widely trusted in and out Eric Michael Kingston , Jimmy Choo Black Suede with Golden Logo Toe Plate Sandals , Salvatore Ferragamo Black Glory Slide Kitten Heel Bow Patent Sandals , Brunello Cucinelli Black Leather Slip On Sneakers Sneakerswomens Valentino Beige High Sandals Good market , LADY Tahari White Strappy Sandals Good design
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.