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.Coliac Martina Grasselli Loafers - Women Coliac Martina Grasselli Loafers online on YOOX United Kingdom - 11571264QC , COOLWAY Emma PLATFORM SANDALS FOR WOMEN , ECCO 12021301379 LOW-TOP TRAINERS FOR WOMEN , Cinzia Soft By Mauri Moda Loafers - Women Cinzia Soft By Mauri Moda Loafers online on YOOX United Kingdom - 11534803BA , New Balance 574 Art School - Sneakers - Women New Balance Sneakers online on YOOX United Kingdom - 11333592TR , Dolce & Gabbana Flip Flops - Women Dolce & Gabbana Flip Flops online on YOOX United Kingdom - 11393071VGMelissa + Alexandre Herchcovitch Court - Women Melissa + Alexandre Herchcovitch Courts online on YOOX United Kingdom - 11046694GGMTNG 50939 Savanna C8016 Negro FASHION SANDALS FOR WOMEN , Women's Vince Camuto Black Sandals Diverse new designBRUNATE 38266 FASHION ANKLE BOOTS FOR WOMEN , men/women SKECHERS Performance GOwalk Flats Popular recommendation , men/women Matisse Trina Boots Stylish and charmingMen/Women Yellow Box Mardelle Sandals good qualityMango DOMINO - Classic heels Colour: black , Bianca Di Classic ankle boots Colour: prugnamens/womens Taryn Rose Jacklyn Heels First batch of customers , mens/womens Mango Slip-ons Colour: brown Rich design , Chloé Sandals - Women Chloé Sandals online on YOOX United Kingdom - 11362995HHOroscuro Sneakers - Women Oroscuro Sneakers online on YOOX United Kingdom - 11455382BW , Camper Sneakers - Men Camper Sneakers online on YOOX United Kingdom - 11555894DB , Dsquared2 Sneakers - Men Dsquared2 Sneakers online on YOOX United Kingdom - 11409365CEmens/womens Franco Sarto Doxie Clogs & Mules Quality and consumer first , Adidas Dune London BREY - Slingback ballet pumps - blue , Köe Boots - Women Köe Boots online on YOOX United Kingdom - 11550648DHPhilipp Plein Court - Women Philipp Plein Courts online on YOOX United Kingdom - 11543939HD , woman Topshop Silver Sandals Platforms NewYr1D5AXC Ladies Restricted Gray Wedges Germany , Not so expensive Frye Melanie Whip Slip-OnKenneth Cole Brown Suede Ankle Flat Zipper Sneakers Sneakers , Balenciaga Black New Studded Wedge Leather Sandals
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.