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.Dolce & Gabbana Court - Women Dolce & Gabbana Courts online on YOOX United Kingdom - 11481131UD , O.X.S. Rubber Soul Boots - Men O.X.S. Rubber Soul Boots online on YOOX United Kingdom - 11554279EO , Collection Privēe? Loafers - Women Collection Privēe? Loafers online on YOOX United Kingdom - 11499965GXCLARKS Emslie Warren SHOES FOR WOMEN , AVID Men's Sneakers | Ocean Depths-Black-White | PUMA Men's Picks | PUMA United StatesLiu ?Jo Shoes Court - Women Liu ?Jo Shoes Courts online on YOOX United Kingdom - 11330118PIwomen BP. Clothing Black Wedges High quality and cheapMISS Giani Bernini Black Bryana Sandals Louis, in detailwomens Charles Jourdan Silver Wedges Orders are welcomewoman Christian Louboutin Mettalic Yolanda Platforms price concessions , Men/Women Crocs Alice Work Flats Moderate cost , Adidas Victoria Shoes DEPORTIVO APLICACIONES - Trainers - rosaAdidas New Balance WR996 - Trainers - petrolmens/womens Donald J Pliner Ericio-ZG Boots Good market , Homers MAISON - Slip-ons Colour: crosta off blackNike Sneakers - Men Nike Sneakers online on YOOX United Kingdom - 11573775GR , ASICS DYNAFLYTE 3 LITE-SHOW - Competition running shoes Colour: black/shocking orangemen's/women's Vasque Pendulum II Sneakers & Athletic Vasque Maintenance capability , men/women Merrell Terran Ari Lattice Sandals New varieties are launched , Nike Sportswear AIR FORCE 1 '07 LV8 - High-top trainers Colour: flax/outdoor green/light brown , Msgm Sneakers - Women Msgm Sneakers online on YOOX United Kingdom - 11495810IXAsh Sneakers - Women Ash Sneakers online on YOOX United Kingdom - 11468247EQRas Sandals - Women Ras Sandals online on YOOX United Kingdom - 11449631QT , Pinko Ballet Flats - Women Pinko Ballet Flats online on YOOX United Kingdom - 11494244PKChie Mihara Sandals - Women Chie Mihara Sandals online on YOOX United Kingdom - 11552683ST , Hannibal Laguna Court - Women Hannibal Laguna Courts online on YOOX United Kingdom - 11541753TE , F.Lli Bruglia Court - Women F.Lli Bruglia Courts online on YOOX United Kingdom - 11345622KOMiu Miu Court - Women Miu Miu Courts online on YOOX United Kingdom - 11283661RX , Ladies Silver Passion Wedges We have received praise from our customers. , Marc by Marc Jacobs Black M9000146 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.