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.See By Chloé Sandals - Women See By Chloé Sandals online on YOOX United Kingdom - 11562024UH , Walk By Melluso Sneakers - Women Walk By Melluso Sneakers online on YOOX United Kingdom - 11534847MAwomen Asics Gt-2140 Sneakers Stable quality , Caterpillar HOLTON ST SB BlackNike Air Max 97 It - Sneakers - Men Nike Sneakers online on YOOX United Kingdom - 11452652NRLADY Giani Bernini Pink Sandals special discount priceWood Wood QUINN SHOE - Slip-ons Colour: whitemens/womens Deer Stags Nu Yorker Oxfords Clearance , RAID FLAVIA - Classic ankle bootsmen/women Boxfresh Trainers - bitterchoc Shoes Moderate costCalvin Klein Jeans IACO - Trainers - whiteConverse STAR PLAYER - Trainers - green/whiteBirkenstock AMSTERDAM - Slippers Colour: melange aubergineBikkembergs Sneakers - Men Bikkembergs Sneakers online on YOOX United Kingdom - 44887203VRGravati Loafers - Men Gravati Loafers online on YOOX United Kingdom - 11557758TQ , Camper Sneakers - Men Camper Sneakers online on YOOX United Kingdom - 11253187JW , mens/womens etnies Jameson SC Sneakers & Athletic etnies Orders are welcome , mens/womens Kenneth Cole Unlisted Hope Driver Loafers Suitable for color , Giuseppe Zanotti Sneakers - Men Giuseppe Zanotti Sneakers online on YOOX United Kingdom - 11446375WAman/woman McQ Netil Eyelet Low Sneakers & Athletic McQ Contrary to the same paragraphVersace Court - Women Versace Courts online on YOOX United Kingdom - 11516871HLTod's Loafers - Women Tod's Loafers online on YOOX United Kingdom - 11569444LBChiara Ferragni Sneakers - Women Chiara Ferragni Sneakers online on YOOX United Kingdom - 11556841ATAsh Ankle Boot - Women Ash Ankle Boots online on YOOX United Kingdom - 11570791NW , Consumer first Columbia Santiam 2 StrapSalvatore Ferragamo Black Pim 30 Chain Low Pumps 1mr1127 Sandals , Badgley Mischka Black Jewel Liberty Ankle Strap Satin Sandalsladies Charlotte Russe Floral Booties Wedges Used in durability , women Nine West Black Jilliane Wedges product qualityDonald J. Pliner Black/Leopard Calfskin Wedge 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.