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.Isabel Marant Ankle Boot - Women Isabel Marant Ankle Boots online on YOOX United Kingdom - 11505259SQOfficine Creative Italia Loafers - Men Officine Creative Italia Loafers online on YOOX United Kingdom - 11483941IEajDxSSpC man/woman Trotters Kendra Heels realOvye' By Cristina Lucchi Ankle Boot - Women Ovye' By Cristina Lucchi Ankle Boots online on YOOX United Kingdom - 11506718RF , Dibrera By Paolo Zanoli Loafers - Women Dibrera By Paolo Zanoli Loafers online on YOOX United Kingdom - 11446981CK , N.D.C. Made By Hand Boots - Women N.D.C. Made By Hand Boots online on YOOX United Kingdom - 11390396UQDolce & Gabbana Ballet Flats - Women Dolce & Gabbana Ballet Flats online on YOOX United Kingdom - 11551718VV , Nila & Nila Sneakers - Women Nila & Nila Sneakers online on YOOX United Kingdom - 11474021GI , woman J.Crew Silver Cyprus Sandals Louis, in detail , lady Saint Laurent Red Leather Sandals Fashion , Women's Fendi Coral-red Leather Sandals Big sale , Calvin Klein ONI - Ballet pumps Colour: blackman/woman IVY KIRZHNER Odessa Sandals Bright colorsmens/womens French Sole Padre Flats Acknowledgement feedback , Platform big velcro trainers , black, PumaAdidas WEEKEND MaxMara UBERTA - Sandals - blue notteASOS DESIGN | ASOS DESIGN Panama High HeelsPro-Keds ROYAL PLUS - Trainers - black , man/woman Bacco Bucci Baal Sneakers & Athletic Bacco Bucci Fine art , man/woman Reebok Lifestyle Fury Adapt UC Sneakers & Athletic Reebok Lifestyle Settlement PriceGrenson Sneakers - Women Grenson Sneakers online on YOOX United Kingdom - 11509161FT , Gerard Sandals - Women Gerard Sandals online on YOOX United Kingdom - 11531628JW , Prezioso Court - Women Prezioso Courts online on YOOX United Kingdom - 11490680QS , 2Star Sneakers - Women 2Star Sneakers online on YOOX United Kingdom - 11560967MUFitflop Sandals - Women Fitflop Sandals online on YOOX United Kingdom - 11575560TQ , hN9K45mL VANS Va3tkn6bt ZAPATILLA CON PLATAFORMA , Durable service Stacy Adams Gusto , WOMEN Tory Burch Orange Espadrille Wedges Different stylesladies Saint Laurent Malibu Sneaker Sneakers Good qualityWOMENS Gold Metallic Tony Sandals Immediate delivery
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.