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.Lea Foscati Ankle Boot - Women Lea Foscati Ankle Boots online on YOOX United Kingdom - 11509133TW , Leon & Harper Sandals - Women Leon & Harper Sandals online on YOOX United Kingdom - 11216257CS , J|D Julie Dee Court - Women J|D Julie Dee Courts online on YOOX United Kingdom - 11508008DKGianni Marra Ankle Boot - Women Gianni Marra Ankle Boots online on YOOX United Kingdom - 11559005VXPuma X Trapstar Ren Boot - Boots - Men Puma X Trapstar Boots online on YOOX United Kingdom - 11394404QK , Marianna Senchina Open-Toe Mules - Women Marianna Senchina Open-Toe Mules online on YOOX United Kingdom - 11197826XI , Colors Of California Sneakers - Women Colors Of California Sneakers online on YOOX United Kingdom - 11486481DEMTNG 53251 Taigo Chocolate FASHION SANDALS FOR WOMENYOKONO Capri 006 SANDALIA BIO PARA MUJER , men/women Baretraps Jolie Flats International big namemens/womens Tamaris Eulalia 1-1-24613-20 Flats High securitySkechers Sport HI-LITES - Trainers Colour: blackmen/women Lacoste GRADUATE - Trainers Reasonable priceman/woman Frye Jackie Zip Tall Boots Easy to useman/woman Swedish Hasbeens Preppy Sky High Heels Fashion pattern , Men/Women Seychelles Gawk Sandals Cheaper than the price , mens/womens Paul Green Rialto Sandal Heels reliable qualityHaglöfs Sneakers - Men Haglöfs Sneakers online on YOOX United Kingdom - 11471188WO , Hogan Sneakers - Men Hogan Sneakers online on YOOX United Kingdom - 11396907MT , men's/women's Crocs Swiftwater Cross-Strap Sneakers & Athletic Crocs Guarantee quality and quantity , Adidas Tommy Hilfiger CORPORATE BELT RAIN BOOT - Wellies - blueSelected Homme Boots - Men Selected Homme Boots online on YOOX United Kingdom - 44903113MK , Red(V) Sneakers - Women Red(V) Sneakers online on YOOX United Kingdom - 44924264UVVidorreta Sandals - Women Vidorreta Sandals online on YOOX United Kingdom - 11468832WL , Alberto Guardiani Sneakers - Women Alberto Guardiani Sneakers online on YOOX United Kingdom - 11488611TRHigh quality and cheap SeaVees Monterey Sneaker Standard , Elegant and sturdy set meal Bostonian Bolton FreeSalvatore Ferragamo Navy Vara Bow Pump Sandals , womens Versace Gold Triple Platforms Beautiful art , ladies Vince Black Sandals Economical and practical
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.