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.Janet & Janet Boots - Women Janet & Janet Boots online on YOOX United Kingdom - 11049270XMLODI Ras FASHION FOOTWEAR FOR WOMEN , HISPANITAS Chi87724-hispanitas FASHION ANKLE BOOTS FOR WOMENWomen's Nike Blue Roshe Sneakers Preferred material , men/women Adrianna Papell Esmond Heels Very practicalmens/womens Merrell Sugarbush Refresh Boots Fashion patternLurex autoclave trainers , silver grey, VictoriaAdidas H?gl Ballet pumps - red , Unisa JUMIEL - Classic heelsman/woman EGO TONIE - Mules Consumer firstman/woman IZOD Cally Boots The color is very eye-catching , Adidas Lacoste LEROND CAW - Trainers - natural , mens/womens Patricia Green Laura Loafers Various latest designsDKNY CLEMSON - Slip-ons Colour: black with logoHarmont&Blaine Sneakers - Men Harmont&Blaine Sneakers online on YOOX United Kingdom - 11537446RDLumberjack Sneakers - Men Lumberjack Sneakers online on YOOX United Kingdom - 11516669CT , Hogan Sneakers - Men Hogan Sneakers online on YOOX United Kingdom - 11559274SHGiovanni Conti Loafers - Men Giovanni Conti Loafers online on YOOX United Kingdom - 11412536AL , Purified Loafers - Women Purified Loafers online on YOOX United Kingdom - 44941212RPGeox Loafers - Women Geox Loafers online on YOOX United Kingdom - 11496787VC , Lerre Court - Women Lerre Courts online on YOOX United Kingdom - 11521929GSCinzia Araia Sneakers - Women Cinzia Araia Sneakers online on YOOX United Kingdom - 11495109CBBoutique Moschino Sandals - Women Boutique Moschino Sandals online on YOOX United Kingdom - 11284366NG , Chiara Ferragni Sneakers - Women Chiara Ferragni Sneakers online on YOOX United Kingdom - 11548395AXAlberto Guardiani Sneakers - Women Alberto Guardiani Sneakers online on YOOX United Kingdom - 11332240NI , Philippe Model Sneakers - Women Philippe Model Sneakers online on YOOX United Kingdom - 11127723NITory Burch Sneakers - Women Tory Burch Sneakers online on YOOX United Kingdom - 11425454IQWear resistant Saucony Originals Shadow Original , See by Chloé Black Blue Gold Emily Bow Leather Slide Tone Heel Sandals , Christian Louboutin Pink Fringe Suede 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.