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.Jeffrey Campbell Ankle Boot - Women Jeffrey Campbell Ankle Boots online on YOOX United Kingdom - 11508707QOLoretta Pettinari Ankle Boot - Women Loretta Pettinari Ankle Boots online on YOOX United Kingdom - 11496200NR , Catarina Martins Ankle Boot - Women Catarina Martins Ankle Boots online on YOOX United Kingdom - 44864735HLRuco Line Sneakers - Women Ruco Line Sneakers online on YOOX United Kingdom - 11334341CG , Jfk Ankle Boot - Women Jfk Ankle Boots online on YOOX United Kingdom - 11503265KG , Festa Milano Court - Women Festa Milano Courts online on YOOX United Kingdom - 11456582WR , LOIS 84741 26 Negro LOW-TOP TRAINERSN.D.C. Made By Hand Sneakers - Women N.D.C. Made By Hand Sneakers online on YOOX United Kingdom - 11526009NB , Via Roma 15 Ankle Boot - Women Via Roma 15 Ankle Boots online on YOOX United Kingdom - 11369848AW , women Sperry Blue/White Denim Partner Sneakers Charming design , women Betsey Johnson Nude Maggi Platforms economy , Birkenstock ARIZONA - Mules - mocca , man/woman Geox WPEACEFUL4 Boots Fair priceEmporio Armani Trainers - black/goldMen/Women Wolverine Roxana Boots High quality and low overhead , mens/womens Rockport Garden Court Buckled Slide Heels Export , men's/women's Kenneth Cole New York Brooke Heels real , 2750 fabric liberty trainers , floral print, Superga , Hogan Court - Women Hogan Courts online on YOOX United Kingdom - 11036642GM , Damy Boots - Men Damy Boots online on YOOX United Kingdom - 11202670OT , Bikkembergs Sneakers - Men Bikkembergs Sneakers online on YOOX United Kingdom - 11520630ET , Men/Women LifeStride Yakira Heels Let our goods go to the worldMagrit Sandals - Women Magrit Sandals online on YOOX United Kingdom - 11566460IJ , Pixy Loafers - Women Pixy Loafers online on YOOX United Kingdom - 11574160QWPantofola D'oro Sneakers - Men Pantofola D'oro Sneakers online on YOOX United Kingdom - 11569617DR , Nike Multi Color Free 5.0 Sneakers , women Nike 818061 001 Sneakers NewBorn Torrey Durable, distressed suede uppers with a round toe , Salvatore Ferragamo White Croc Pattern Leather Sneakers Sneakers , LADY Nina Ricci Black Sandals Used in durability ,
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.