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.Alberto Fermani Ankle Boot - Women Alberto Fermani Ankle Boots online on YOOX United Kingdom - 11362741WGChie Mihara Ankle Boot - Women Chie Mihara Ankle Boots online on YOOX United Kingdom - 11362407MF , Exquisite processing Trainers , navy/white, Gola , 181 By Alberto Gozzi Loafers - Women 181 By Alberto Gozzi Loafers online on YOOX United Kingdom - 11362135EQ , G.H. Bass & Co Boots - Men G.H. Bass & Co Boots online on YOOX United Kingdom - 11544377MFwomen Lambertson Truex White Sandals Most practical , Pier One Winter boots - yellowLacoste REY CAW - TrainersTweedy heeled wellington boots , black, Be Only , Rochas Court - Women Rochas Courts online on YOOX United Kingdom - 11467240UR , Ann Demeulemeester Sneakers - Men Ann Demeulemeester Sneakers online on YOOX United Kingdom - 11572664OJmen's/women's Tommy Hilfiger Marcus Sneakers & Athletic Tommy Hilfiger Known for its beautiful quality , Asfvlt Sneakers - Women Asfvlt Sneakers online on YOOX United Kingdom - 11506988GJIkaros Sandals - Women Ikaros Sandals online on YOOX United Kingdom - 11532588ALA.Testoni Sandals - Women A.Testoni Sandals online on YOOX United Kingdom - 11555596AWRas Court - Women Ras Courts online on YOOX United Kingdom - 11449630TC , Elisabetta Franchi Court - Women Elisabetta Franchi Courts online on YOOX United Kingdom - 11243232GFMagrit Ballet Flats - Women Magrit Ballet Flats online on YOOX United Kingdom - 11566395DU , Hogan Rebel Sneakers - Women Hogan Rebel Sneakers online on YOOX United Kingdom - 11541655XUGeneral product Old Gringo Dolce Stitch , Elegant shape Bogs Sauvie Slip-On BootGeneral product Loeffler Randall Alfie , Year-end special promotions bernie mev. HonestyQuality First Bruno Magli ClaudioLifeStride Vila A classic silhouette gets a dose of fresh style with the sporty LifeStride Vila loafer! , Ladies Chrissie Morris Gray Metropolis Platforms in short supplyWOMENS Isabel Marant White Sneakers Easy to clean surface , women Céline Black Velvet Espadrilles Sandals Immediate deliveryChristian Louboutin Nude Bip Bip Sneaker Sneakersladies Gold Brown Formal Shoes Excellent craft ,
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.