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.Essentiel Antwerp Ankle Boot - Women Essentiel Antwerp Ankle Boots online on YOOX United Kingdom - 11527821QT , Cross Walk Ankle Boot - Women Cross Walk Ankle Boots online on YOOX United Kingdom - 11517750MDAlan Jurno Loafers - Women Alan Jurno Loafers online on YOOX United Kingdom - 11519205GK , Hannibal Laguna Court - Women Hannibal Laguna Courts online on YOOX United Kingdom - 11542183FO , Drkshdw By Rick Owens Sneakers - Men Drkshdw By Rick Owens Sneakers online on YOOX United Kingdom - 11570527RBPellettieri Di Parma Sneakers - Men Pellettieri Di Parma Sneakers online on YOOX United Kingdom - 11167843UQRIVIERABONUCCI Sandalias Plataforma Mujer Piel Ja462f46-rojo WEDGE-HEEL SANDALS FOR WOMEN , WOMENS Zara Metallic Pewter Wedges Exquisite (medium) workmanship , CLARKS Griffin Mabel ZAPATO PLANO PARA MUJER , BUNKER Cop Sn1 BOTíN PLANO DE MUJERJordan SUPER.FLY - Basketball shoes Colour: white/black/turbo green/infrared , mens/womens Adidas YUNG-1 Shoes Schuhe High securityThorogood Jackson Moc Toe Boots (Big Kid)Converse Skate One Star CC Ox Skate , Men/Women Nina Amabel Heels First qualitySelected Homme | Selected Homme Premium Sneaker With Panel Details , Ted Baker AMADIP - Ankle boots Colour: black iguazuFabi Loafers - Men Fabi Loafers online on YOOX United Kingdom - 11550006MUSalomon UTILITY FREEZE CS WP - Winter boots - black/empire yellowFrankie Morello Boots - Men Frankie Morello Boots online on YOOX United Kingdom - 11463500XOVans Sneakers - Women Vans Sneakers online on YOOX United Kingdom - 11573795QG , Rodolphe Menudier Boots - Women Rodolphe Menudier Boots online on YOOX United Kingdom - 11331138TVLe Silla Court - Women Le Silla Courts online on YOOX United Kingdom - 11530731VHHaj5Rx0A SoftWalk SAVA x SoftWalk Hana , IIxZc2c9 Nike SB Portmore II UltralightBeautiful appearance La Sportiva FinaleGiuseppe Zanotti White New Gz Men Leather High-top Shark Tooth Zip Sneaker 10 / Sneakers , ladies Lilly Pulitzer Silver Leather Sandals From the latest modelwomen Bettye Muller Navy Daphne Platforms superior , MISS Valentino Black Mw2s0c01trz Sandals Fine workmanship
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.