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.Roberto Festa Ankle Boot - Women Roberto Festa Ankle Boots online on YOOX United Kingdom - 11544982SR , Rag & Bone Boots - Men Rag & Bone Boots online on YOOX United Kingdom - 11572505FR , Fabrizio Leonelli Sandals - Women Fabrizio Leonelli Sandals online on YOOX United Kingdom - 11501633NOEpic Flip v2 | black-white | PUMA Sandals | PUMA United StatesNew Balance 247 Tritium Pack - Sneakers - Men New Balance Sneakers online on YOOX United Kingdom - 11553829RN , men's/women's Ecco Performance Esphino Low Sneakers & Athletic Ecco Performance Let our goods go to the world , Nike Raisin Juvenate Womens Sneakers 724979-503 Dark Sneakers , CARMEN GARCIA 64s5 WEDGE-HEEL ESPADRILLES FOR WOMENPuma BASKET HEART PATENT - Trainers FromRiver Island High heeled sandals Colour: orangeTommy Hilfiger OXLEY - Wellies , DKNY LAURA - Slip-ons Colour: brownCole Haan Keatn Hiker WP IIAdidas Clarks DOVE MADELINE - Ankle boots - black , Element TOPAZ C3 MID - High-top trainers - olive , mens/womens Giuseppe Zanotti I770069 Boots Elegant and stable packagingmen/women Loeffler Randall Elsie Heels for you to choose , Mot-Clè Court - Women Mot-Clè Courts online on YOOX United Kingdom - 11486577WA , man/woman Nine West Designer Heels We have won praise from our customers.Men/Women Marc Fisher LTD Hocie Heels At an affordable price , Men/Women Seychelles Party Up Heels Highly praised and appreciated by the consumer audienceMarian Sandals - Women Marian Sandals online on YOOX United Kingdom - 11563945QKDonna Soft Court - Women Donna Soft Courts online on YOOX United Kingdom - 11068880QB , Pv6Hw4Oj Women's Lanvin Pink Wedges CheapestExquisite (processing) processing FLY LONDON Mes-zSpecial purchase Spring Step SaibaraExcellent value Miz Mooz Carey , Tory Burch Bright Navy Landon 55 Leather Gold Reva Espadrille Wedges SandalsNike Women's Air Max 90 Ultra Essentials Sneakers Style/Color: 724971-004 Sneakers , Miu Miu Silver Metal Cap Indented Leather Sneakers Sneakers ,
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.