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.Pop Boy Ankle Boot - Women Pop Boy Ankle Boots online on YOOX United Kingdom - 11483958RJ , Giancarlo Paoli Ankle Boot - Women Giancarlo Paoli Ankle Boots online on YOOX United Kingdom - 11477320GTTom Ford Ankle Boot - Women Tom Ford Ankle Boots online on YOOX United Kingdom - 11399990EQ , Dr. Martens Ankle Boot - Women Dr. Martens Ankle Boots online on YOOX United Kingdom - 11477917KKADIDAS Db0893 LOW-TOP TRAINERS FOR WOMENKi6? Who Are You? Ankle Boot - Women Ki6? Who Are You? Ankle Boots online on YOOX United Kingdom - 11542889JF , Eileen Fisher Black Largo Leather/ Espadrille Wedge Sandals , womens Guess Forest Green Suede Wedges Special function , THIERRY RABOTIN 4800q WEDGE-HEEL SANDALS FOR WOMEN , Superstar wedge trainers , white/black, Adidas OriginalsMen/Women Pelle Moda Fawn Heels Has a long reputationmen/women SeaVees 12/64 Huntington Middie Sneakers & Athletic SeaVees Great choiceMen/Women Ryka Harmony Sneakers & Athletic Ryka Quality and consumer first2Star Sneakers - Women 2Star Sneakers online on YOOX United Kingdom - 11538451VQValleverde Court - Women Valleverde Courts online on YOOX United Kingdom - 11552990CH , Deimille Court - Women Deimille Courts online on YOOX United Kingdom - 11550937IEEmporio Armani Boots - Women Emporio Armani Boots online on YOOX United Kingdom - 11240048AB , Aniye By Sneakers - Women Aniye By Sneakers online on YOOX United Kingdom - 11543716UEBlackstone Ankle Boot - Women Blackstone Ankle Boots online on YOOX United Kingdom - 11581814TXVoile Blanche Sneakers - Women Voile Blanche Sneakers online on YOOX United Kingdom - 11580798QLErnesto Dolani Sandals - Women Ernesto Dolani Sandals online on YOOX United Kingdom - 11565536AGLaura Biagiotti Sandals - Women Laura Biagiotti Sandals online on YOOX United Kingdom - 11566424QU , Arezzo Ballet Flats - Women Arezzo Ballet Flats online on YOOX United Kingdom - 11576651ONPhilippe Model Sneakers - Women Philippe Model Sneakers online on YOOX United Kingdom - 11562747GH , Valentino Multicolor Rockstud Kitten Heel PumpsInternational big name Walking Cradles Pool , General product Blondo Hanna Waterproof , LADY Nordstrom Black Leather Bp Wedges new entry , MM6 Maison Martin Margiela Silver Platinum Pumpswomen Gap Black Sandals Wedges Price reduction
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.