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.Festa Milano Ankle Boot - Women Festa Milano Ankle Boots online on YOOX United Kingdom - 11248006JHConverse All Star Ct As Hi 70'S Leather - Sneakers - Men Converse All Star Sneakers online on YOOX United Kingdom - 11247747RH , Twin-Set Simona Barbieri Ankle Boot - Women Twin-Set Simona Barbieri Ankle Boots online on YOOX United Kingdom - 11322579SN , Ma & Mi Ankle Boot - Women Ma & Mi Ankle Boots online on YOOX United Kingdom - 11415161IS , Jolie By Edward Spiers Court - Women Jolie By Edward Spiers Courts online on YOOX United Kingdom - 11539912IP , CUMBIA 30584 Moka Mate SANDALIA PLANA DE MUJER , Ladies Ted Baker Olive Green Wedges Beautiful artman/woman Naturalizer Hydie Heels Stylish and funMen/Women Mark Nason Waller Oxfords VariousStacy Adams Madison II Chukka Boot , men's/women's Nine West Lilac Heels Quality and quantity guaranteed , men's/women's Bronx Sandals Online export store , men/women Jewel Badgley Mischka Henderson Heels Personalization trendPublic Desire JAGGER - High heels Colour: pinkGioseppo Sneakers - Men Gioseppo Sneakers online on YOOX United Kingdom - 11574417SCHogan Sneakers - Men Hogan Sneakers online on YOOX United Kingdom - 11366255KTReebok | Reebok Classic Rapide Sneakers In Black Exclusive to ASOS DV5074Fabi Boots - Women Fabi Boots online on YOOX United Kingdom - 11531433FK , Marian Court - Women Marian Courts online on YOOX United Kingdom - 11564040SR , Adidas Originals Sneakers - Women Adidas Originals Sneakers online on YOOX United Kingdom - 11462350CAGiuseppe Zanotti Sneakers - Women Giuseppe Zanotti Sneakers online on YOOX United Kingdom - 11375764LB , Rebecca White Sandals - Women Rebecca White Sandals online on YOOX United Kingdom - 11578347FGDeimille Ballet Flats - Women Deimille Ballet Flats online on YOOX United Kingdom - 11557397HWy6GlENlE Tory Burch Brannan Backless DriverStVDaVq6 Kenneth Cole Reaction Klay MonkdKHcVZQk EXTREM Martha 2 Gris , A balance between toughness and hardness Klogs Footwear Cardiff , Prada Zebra Stripes Dark Brown and White St. Tigre/Calzature Donna SandalsNew Balance Black Walking Supple Leather Upper Sneakers , WOMEN Saint Laurent Green Tribute Sandals Low costs
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.