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.Nila & Nila Boots - Women Nila & Nila Boots online on YOOX United Kingdom - 11474297QQ , Maison Margiela Court - Women Maison Margiela Courts online on YOOX United Kingdom - 11290402RL , VIGUERA 0276-vigueras WEDGE-HEEL SANDALS FOR WOMEN , New Balance 999 Seasonal - Sneakers - Men New Balance Sneakers online on YOOX United Kingdom - 11195772XR , ladies LifeStride White 243l62 Sandals Ideal gift for all occasions , Ladies Manolo Blahnik Beige Bb Pumps Attractive and durable , womens Steven by Steve Madden Platforms Reliable quality , Men/Women Frye Jones Chukka Boots cheaper , Yak leather trainers , silver-coloured, Pataugas , Jeffrey Campbell STOOGES - Cowboy/Biker boots Colour: black box , Ctas ii high top trainers , charcoal, Converse , Reebok Classic FREESTYLE METALLIC - High-top trainersDiadora Sneakers - Men Diadora Sneakers online on YOOX United Kingdom - 11519185RW , Men/Women PUMA Basket Heart Hyper Emb Sneakers & Athletic PUMA Current shapeAdidas Liu Jo Jeans TINA - Over-the-knee boots - blackNike Performance SUPERFLY 6 CLUB MG - Moulded stud football boots , ASICS DYNAFLYTE 3 LITE-SHOW - Competition running shoes Colour: black/hot pinkmen's/women's Blue by Betsey Johnson Carin Heels Used in durability , man/woman Chinese Laundry Oahu Sandal Heels New products in 2039Soher Sandals - Women Soher Sandals online on YOOX United Kingdom - 11460737PV , Vince. Sneakers - Women Vince. Sneakers online on YOOX United Kingdom - 11560922DQSimon Scott Sneakers - Women Simon Scott Sneakers online on YOOX United Kingdom - 11543501HHCafènoir Flip Flops - Women Cafènoir Flip Flops online on YOOX United Kingdom - 11380781PVKeys Ankle Boot - Women Keys Ankle Boots online on YOOX United Kingdom - 11551413UGSalvatore Ferragamo Court - Women Salvatore Ferragamo Courts online on YOOX United Kingdom - 11307738FXLiviana Conti Boots - Women Liviana Conti Boots online on YOOX United Kingdom - 11449671HLEmanuélle Vee Sandals - Women Emanuélle Vee Sandals online on YOOX United Kingdom - 11547204HXNot so expensive Diane von Furstenberg Dakotawomen Stuart Weitzman Brown Uptown Platforms High securityGivenchy White Jelly Gladiator 40) 476642 Sandals
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.