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.Roger Vivier Ankle Boot - Women Roger Vivier Ankle Boots online on YOOX United Kingdom - 11501705KCJanet & Janet Court - Women Janet & Janet Courts online on YOOX United Kingdom - 11399798XA , Giorgio Armani Loafers - Women Giorgio Armani Loafers online on YOOX United Kingdom - 11523379BLwomens J.Crew Navy/Canvas Wedges Used in durability , Men/Women Tommy Hilfiger Carsin2 Sandals Strong value , Royal RepubliQ ELPIQUE SHOE - TrainersMen/Women ara Maemi Boots Year-end saleman/woman Nike Flex Bijoux Sneakers & Athletic Nike cheapBOSS ATHLEISURE SPACIT - Trainers - charcoal , Gioseppo Sneakers - Men Gioseppo Sneakers online on YOOX United Kingdom - 11574454ERSantoni Loafers - Men Santoni Loafers online on YOOX United Kingdom - 11182766FF , Santoni Boots - Men Santoni Boots online on YOOX United Kingdom - 11519964NPLanvin Sneakers - Men Lanvin Sneakers online on YOOX United Kingdom - 11505146HD , Adidas Levi's? MELROSE STUDS MID - High-top trainers - regular whiteman/woman Diadora B.Elite Premium L Sneakers & Athletic Diadora New designWide fit black studded ballet pumps, sizes 38-45 , black, Castaluna , Dr Martens | Dr Martens Delray Overdyed 3-Eye Shoes In Green , Les Tropéziennes par M Belarbi CIRA - Winter boots Colour: noirmen/women Summit by White Mountain Sherilyn Heels Fashion versatile shoesman/woman Nine West Ziesta Heels Highly appreciated and widely trusted in and out , Montané Espadrilles - Women Montané Espadrilles online on YOOX United Kingdom - 11555664CKSargossa Court - Women Sargossa Courts online on YOOX United Kingdom - 11380712JE , Mexicana Ankle Boot - Women Mexicana Ankle Boots online on YOOX United Kingdom - 11520267VG , Jil Sander Sneakers - Women Jil Sander Sneakers online on YOOX United Kingdom - 11560216UTPrada Dark Brown High Tops SneakersLightweight shoes GUESS Decia 2 , LADY Zara Beige Leather High Sandals Highly praised and appreciated by the audience of consumersLADY Jack Rogers Platinum Shelby Wedges Nice and charmingTory Burch Gold Scallop Platform Wedge Sandals , LADY Prada Gray 1056 Sneakers Low price
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.