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.Wize & Ope Sneakers - Men Wize & Ope Sneakers online on YOOX United Kingdom - 11496915FG , Bp Zone Loafers - Women Bp Zone Loafers online on YOOX United Kingdom - 11460112CPEmporio Armani Velvet Pull-On Ankle Boot , Open Closed Shoes Ankle Boot - Women Open Closed Shoes Ankle Boots online on YOOX United Kingdom - 11569460OINike Air Huarache Run - Sneakers - Men Nike Sneakers online on YOOX United Kingdom - 11187873HG , L' Autre Chose Sandals - Women L' Autre Chose Sandals online on YOOX United Kingdom - 11485240WCTory Burch Blond Tan Fleming Summer Logo Espadrilles Sandals , STONEFLY Eve 11 WEDGE-HEEL SANDALS FOR WOMEN , lady Chloé Beige Platforms Attractive and durable , woman Teva Red Evo Sneakers Fast deliverymen's/women's ALDO Gloari Sandals Big clearance sale , Adidas Trussardi Jeans Trainers - fantasia/black , MM6 Maison Margiela Metallic Wide Heel Muleman/woman UNIONBAY Chandelier Sandals Brand feast , Adidas Skateboarding | adidas Skateboarding Matchcourt Sneakers In Black F37383 , Onitsuka Tiger MEXICO 66 - Trainers - birch/navyCasadei TRAIN - High heeled ankle boots Colour: sharkskin , New Look FERRY - Platform sandals Colour: mid greyman/woman Nine West Xen 3 Sandals flagship store , Amberlee rose leather trainers , navy blue, ClarksMarni Sneakers - Men Marni Sneakers online on YOOX United Kingdom - 11300541VX , Dr Martens | Dr Martens Bonny II Black Short Utility BootsBruno Bordese Sneakers - Men Bruno Bordese Sneakers online on YOOX United Kingdom - 11496721JJDolfie Sneakers - Women Dolfie Sneakers online on YOOX United Kingdom - 11529012ACElata Sandals - Women Elata Sandals online on YOOX United Kingdom - 11501924UPMajora Boots - Women Majora Boots online on YOOX United Kingdom - 11556891AHAlberto Guardiani Sneakers - Women Alberto Guardiani Sneakers online on YOOX United Kingdom - 11267423GJ , Giuseppe Zanotti Loafers - Women Giuseppe Zanotti Loafers online on YOOX United Kingdom - 11549085DWValentino Garavani Court - Women Valentino Garavani Courts online on YOOX United Kingdom - 11463475RH , Dockers Lovell Don't be modest! Complement your casual style with the Dockers Lovell ,
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.