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.Amarcord Ankle Boot - Women Amarcord Ankle Boots online on YOOX United Kingdom - 11503663LPArgila Ankle Boot - Women Argila Ankle Boots online on YOOX United Kingdom - 11457896KW , PITILLOS 1328 FASHION LOAFERS FOR WOMENEH Jaray FASHION BOOTS FOR WOMENMuse Maia Street 2 Women’s Sneakers | Whisper White-Whisper White | PUMA Training + Gym | PUMA United States , Women's Pedro Garcia Black Vania Sandals Quality and quantity guaranteedFoot Petals Technogel w/ Softspots Tip Toes 2-Pair Pack , womens Jack Rogers Platinum Thompson Sandals durability , LADY Børn Yelloe Sandals Stylish and charming , Fierce rope vr trainers , black, Puma , Lloyd NEO - Smart slip-ons Colour: schwarzmen/women Bella-Vita Adriann II Boots Queensland , man/woman DC Mason Boots Fine art , Men/Women Adidas Flb_Runner Shoes Schuhe Don't worry when shoppingAdidas Diadora N.92 - Trainers - blackPrimabase Sneakers - Women Primabase Sneakers online on YOOX United Kingdom - 11486409DCPlayhat Sneakers - Men Playhat Sneakers online on YOOX United Kingdom - 44843549DWJoshua*S Sneakers - Men Joshua*S Sneakers online on YOOX United Kingdom - 11519817XLChippewa Boots - Men Chippewa Boots online on YOOX United Kingdom - 11480132AD , Men/Women Crocs Crocband Tropics Clog Clogs & Mules classic style , Maison Margiela Sneakers - Men Maison Margiela Sneakers online on YOOX United Kingdom - 11471936ELRipness Sneakers - Women Ripness Sneakers online on YOOX United Kingdom - 11514379KIRas Loafers - Women Ras Loafers online on YOOX United Kingdom - 11319779AM , Alaïa Sandals - Women Alaïa Sandals online on YOOX United Kingdom - 11153877FL , Fendi Ankle Boot - Women Fendi Ankle Boots online on YOOX United Kingdom - 11492592VXWOMENS Salomon Light Amphibian Sneakers Nice , gyOrc1XQ LADY Naturalizer Grey Sandals FreeYear-end sale ED Ellen DeGeneres Louranafashion Cycleur de Luxe Burton , Givenchy Multi Color Star Print Low Top Black with Red Trim White Star Sneakers Sneakers
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.