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.Boutique Moschino Ballet Flats - Women Boutique Moschino Ballet Flats online on YOOX United Kingdom - 11464541ONLocker 41 Ankle Boot - Women Locker 41 Ankle Boots online on YOOX United Kingdom - 11527505RT , Giuseppe Zanotti Ankle Boot - Women Giuseppe Zanotti Ankle Boots online on YOOX United Kingdom - 11264141QC , LADY Prada Black Simple Sandals promotionGiuseppe Zanotti White & Gold New Gz Design Women Genuine Leather Metal Chain Detail High-top SneakersNila & Nila Ankle Boot - Women Nila & Nila Ankle Boots online on YOOX United Kingdom - 11474446TM , CUMBIA 30584 Moka Metal SANDALIA PLANA DE MUJERlady Green Platforms At a lower priceDorothy Perkins MISSION - Ankle boots Colour: chocolate , Vagabond HARVEY - Classic ankle boots , Men/Women Maine Woods Alicia Boots Queensland , men's/women's Bandolino Gomeisa Heels Elegant appearanceAdidas Men's Eezay Soft Thong Sandals , Selected Femme SFDINA - Trainers , SKECHERS Relaxed Fit?: Soven - LoradoReebok Sneakers - Men Reebok Sneakers online on YOOX United Kingdom - 11327501XE , men's/women's A2 by Aerosoles Chlean Start Sandals a wide range of products , mens/womens adidas Questar BYD Sneakers & Athletic adidas Modern and elegant fashionman/woman Gioseppo Cowboy/Biker boots Colour: multicolor Various types and stylesmen/women New Balance Arishi v1 Sneakers & Athletic New Balance Impeccable , Bruschi Court - Women Bruschi Courts online on YOOX United Kingdom - 11464340BWMinelli Sandals - Women Minelli Sandals online on YOOX United Kingdom - 11462086XG , Chiara Luciani Boots - Women Chiara Luciani Boots online on YOOX United Kingdom - 11536293IU , Marco Barbabella Court - Women Marco Barbabella Courts online on YOOX United Kingdom - 11519096WQ , WOMENS Tory Burch Sz7 Sandals Affordable , German Outlets Finn Comfort Santa Fe-SHighly praised and appreciated by the consumer audience Pikolinos Margarita 943-1607 , Roper Lightfoot The Lightfoot by Roper has a smooth, streamline style with a lightweight construction for easy mobility and all-day comfort. , womens Off-White™ Black/Yellow Industrial Sandals Known for its beautiful qualityHermès Black Leather Grey Fabric/Canvass 42.5 Italy 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.