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.F.Lli Bruglia Ballet Flats - Women F.Lli Bruglia Ballet Flats online on YOOX United Kingdom - 11533095GC , Peter Non Sandals - Women Peter Non Sandals online on YOOX United Kingdom - 11509137NOLiu •Jo Court - Women Liu •Jo Courts online on YOOX United Kingdom - 11537947MJSuede Classic X-Chain Sneakers | Reed Yellow-Metallic Gold | PUMA SUEDE CHAINS | PUMA United StatesWolverine King Caribou III 9 Inch Soft Toe Bootlady Vince Camuto Blue Momas Platforms Different stylesZara Black With Tags - Glossy SandalsTrussardi Jeans CRISS CROSS - Mulesrag & bone Oliver II Boot , Kennel & Schmenger Elle Floral Slide , Kenneth Cole New York Design 10801mens/womens Touch Ups Maddox by Dyeables Heels Current shapeAdidas Steve Madden NOAH - Trainers - pink , Onitsuka Tiger ULTIMATE 81 - Trainers - oatmeal/moonrockL37 PEARLSPARTY BITES - Classic ankle boots Colour: blackman/woman GUESS Raelyn Sandals At a lower price , men's/women's Kelsi Dagger Brooklyn Clarkson Sandals Elegant shape , Fendi Sneakers - Women Fendi Sneakers online on YOOX United Kingdom - 11482604STPrada Loafers - Women Prada Loafers online on YOOX United Kingdom - 11205251FP , men's/women's SKECHERS Flex Advantage 3.0 Brightbro Sneakers & Athletic SKECHERS New styleHead over Heels by Dune CLARISSA - High heels Colour: black , Geneve Sandals - Women Geneve Sandals online on YOOX United Kingdom - 11437904DQPura López Court - Women Pura López Courts online on YOOX United Kingdom - 11520890DP , You Khanga Sandals - Women You Khanga Sandals online on YOOX United Kingdom - 11303807JNRoger Vivier Black Patent Leather SandalsGoyuGxrx Keen Presidio II Waterproof BootnmF0ZENW Vibram FiveFingers V-Train Gold's GymLQJaq4Ou POLO RALPH LAUREN BernaLightweight shoes Corral Boots Q0003 , womens Opening Ceremony Tan Iggie Sneakers Suitable for color ,
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.