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.Cesare Paciotti Ankle Boot - Women Cesare Paciotti Ankle Boots online on YOOX United Kingdom - 11506841HDAntik Batik Flip Flops - Women Antik Batik Flip Flops online on YOOX United Kingdom - 11338349TH , Nine West Leisa - Sandals - Women Nine West Sandals online on YOOX United Kingdom - 11484184PGAndrea Ventura Firenze Loafers - Men Andrea Ventura Firenze Loafers online on YOOX United Kingdom - 11531836MR , Tsd12 Ankle Boot - Women Tsd12 Ankle Boots online on YOOX United Kingdom - 11453882CC , SOTOALTO Yohono FASHION FOOTWEAR FOR WOMENLanvin Black Pull On Sneakers Sneakers , Ca By Cinzia Araia Sneakers - Women Ca By Cinzia Araia Sneakers online on YOOX United Kingdom - 11506669NW , PANAMA JACK Belly Snake B1 Napa Marino FASHION BALLERINAS FOR WOMENTory Burch Navy and Wihte Slip On Sneaker Sneakers , men/women M4D3 Osaka Oxfords Louis, elaborateDune London GARA - Slip-ons , Pearl Izumi Em Road M 2 , Adidas Skateboarding | adidas Skateboarding 3MC Vulc sneaker in white , Men/Women LifeStride Evette Loafers a lot of varieties , men/women Anne Klein Bara Oxfords a wide variety of goods , men/women Church's Burwood Wing Tip Oxford Oxfords Vintage tide shoes , adidas Performance ELEMENT RACE - Neutral running shoes - footwear white/core black/grey two , men's/women's Lacoste LT Dual 317 1 Sneakers & Athletic Lacoste high quality productGeox Sneakers - Women Geox Sneakers online on YOOX United Kingdom - 11522645BFUnisa Court - Women Unisa Courts online on YOOX United Kingdom - 11280481MHPaloma Barceló Boots - Women Paloma Barceló Boots online on YOOX United Kingdom - 11510216CINr Rapisardi Boots - Women Nr Rapisardi Boots online on YOOX United Kingdom - 11273590DO , classic style CAT Exigent OUTDOOR HOMBREYear-end sale Oboz Traverse LowSplendid Neva Perfect your compliment-worthy fall look with the Splendid Neva pointed-toe bootie , Giuseppe Zanotti Gold E70164 Roll 40 Leather (146720) SandalsGiuseppe Zanotti Metallic Gold Snake High-top Sneakers Sneakerswoman sacai Black Leg Strap Sandals New designHermès Orange/White Papaya/White Kool Sneakers Size36/36.5 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.