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.Fratelli Rossetti Ankle Boot - Women Fratelli Rossetti Ankle Boots online on YOOX United Kingdom - 11458991NLBaldinini Trend Sneakers - Women Baldinini Trend Sneakers online on YOOX United Kingdom - 11538982CHHunter Original Dark Sole Chelsea Boots , +2 Made In Italy Boots - Men +2 Made In Italy Boots online on YOOX United Kingdom - 11538319SCLadies Franco Sarto Black Mesh Sandals Has a long reputationConverse Dusty Rose Nude Collection In Sneakers , adidas By Stella McCartney Grey 12567 Sneakers , New Look JUMBLE - Slip-ons Colour: blackSam Edelman KINZEY - Ankle bootsJerusalem Sandals Sunset Blvd - Antika CollectionLFL by Lust For Life Simple , mens/womens Whistles SLIDER - Mules Different styles , Adidas Oxitaly SONIA - Classic heels - neroAdidas Toral Ankle boots - ante marinoLi-Ning Sneakers - Men Li-Ning Sneakers online on YOOX United Kingdom - 11495091ODPrimabase Sneakers - Men Primabase Sneakers online on YOOX United Kingdom - 11486516AU , Hogan Sneakers - Men Hogan Sneakers online on YOOX United Kingdom - 11461697TC , mens/womens Burton Mint '18 Boots Ranked first in its class , men's/women's SeaVees Legend Sneaker Wintertide Sneakers & Athletic SeaVees Cheap , Carrano Sandals - Women Carrano Sandals online on YOOX United Kingdom - 11268654FSLiviana Conti Loafers - Women Liviana Conti Loafers online on YOOX United Kingdom - 11538478DUHundred 100 Sandals - Women Hundred 100 Sandals online on YOOX United Kingdom - 11413720PPCrime London Sneakers - Women Crime London Sneakers online on YOOX United Kingdom - 11556664TFVic Matiē Loafers - Women Vic Matiē Loafers online on YOOX United Kingdom - 11536009IQVagabond Shoemakers Court - Women Vagabond Shoemakers Courts online on YOOX United Kingdom - 11320304JW , Vicini Tapeet Boots - Women Vicini Tapeet Boots online on YOOX United Kingdom - 11312508KODior Navy Blue/White Drivedior Sneaker SneakersReputation first Native Shoes Milesadidas By Stella McCartney Multi/ Olive with Blk&wht Pattern Trochilus Boost Sneakerswoman J.Crew Black Espradille Wedges Primary quality
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.