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.Laura Bellariva Sneakers - Women Laura Bellariva Sneakers online on YOOX United Kingdom - 11512721OS , Roberto Cavalli Sandals - Women Roberto Cavalli Sandals online on YOOX United Kingdom - 11458853RA , Anna F. Court - Women Anna F. Courts online on YOOX United Kingdom - 11355376AF , Kudetà Ankle Boot - Women Kudetà Ankle Boots online on YOOX United Kingdom - 11540064TCladies Brighton Black Kiki Sandals QueenslandDibrera By Paolo Zanoli Court - Women Dibrera By Paolo Zanoli Courts online on YOOX United Kingdom - 11571180FC , Adidas Originals Nmd_R1 Stlt Pk - Sneakers - Men Adidas Originals Sneakers online on YOOX United Kingdom - 11432133TW , MARIA MARE 61363 C25998 Peach Negro FASHION FOOTWEAR FOR WOMENMatt Bernson Pastel Purple Black White New Sneakers SneakersNike Multi Color Youth Roshe One Print Sneakers , New Balance Fresh Foam Cruz v2 KnitALPE S030903521bpi FASHION ANKLE BOOTS FOR WOMENONLY SHOES ONLSAGE CONTRAST - Trainers , SKECHERS Ultra Flex - Weave AwayAir zoom pegasus 35 running shoes , navy/pink, NikeASOS DESIGN | ASOS DESIGN Eartha zip ankle bootsman/woman Tata Italia Slip-ons Colour: beige fashionmen's/women's PARC City Boot Harrow Boots Price reduction , Men/Women Steve Madden Dent 6 Oxfords New style , men's/women's Newton Running Gravity VI Sneakers & Athletic Newton Running Different stylesMen/Women Imagine Vince Camuto Pember Heels Make full use of materialsCristiano Rossani® Loafers - Men Cristiano Rossani® Loafers online on YOOX United Kingdom - 11557400GQGuido Sgariglia Sandals - Women Guido Sgariglia Sandals online on YOOX United Kingdom - 11480345HQ , Liviana Conti Court - Women Liviana Conti Courts online on YOOX United Kingdom - 11554426BJ , Simone Rocha Court - Women Simone Rocha Courts online on YOOX United Kingdom - 11455454RAMassimo Lonardo Sandals - Women Massimo Lonardo Sandals online on YOOX United Kingdom - 11561506LT , Giorgio Fabiani Court - Women Giorgio Fabiani Courts online on YOOX United Kingdom - 11568339SI , Lafayette 148 New York White & Grey Snakeskin Leather Heels Sandals , Women's Christian Louboutin Dark Brown Platforms High quality and low effort , Nike Purple Air Max Tailwind 8 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.