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.Salvador Ribes Ankle Boot - Women Salvador Ribes Ankle Boots online on YOOX United Kingdom - 11247854MHLaura Biagiotti Loafers - Women Laura Biagiotti Loafers online on YOOX United Kingdom - 11504395DULes Tropeziennes Court - Women Les Tropeziennes Courts online on YOOX United Kingdom - 11024483ICNike Black White and Dark Grey Women's Free 5.0 Tr Fit 5 Sneakers , woman Chloé Beige Cute Heels Platforms Different products , ladies Cole Haan Black - Sandals New design , Men/Women Dr. Scholl's Patch Boots Preferred boutiqueMen/Women Johnston & Murphy Charlene Oxford Oxfords German Outlets , man/woman Comfortiva Leslie Sandals Contrary to the same paragraph , Skechers Sport SKYLINE WOODMIST - Trainers - blackMen/Women mint&berry Sandals Colour: blue Pleasant appearance , men/women Lazamani Ankle boots High-quality materials , Men/Women Nine West Jennelle Heels King of quantityman/woman LifeStride Darcy Heels First batch of customers , mens/womens Kenneth Cole Reaction Great Viber Heels use , mens/womens Sperry Endeavor 3-Eye Boat Sperry Complete specificationmen's/women's Dr. Martens Colton DM's Lite Boots Known for its excellent quality , man/woman Crocs Olivia II Flat Flats Ideal gift for all occasionsLove Moschino Sneakers - Men Love Moschino Sneakers online on YOOX United Kingdom - 11493182EX , Tiffi Court - Women Tiffi Courts online on YOOX United Kingdom - 11526329KU , Tod's Boots - Women Tod's Boots online on YOOX United Kingdom - 11570317RXOlivia's Bow Sandals - Women Olivia's Bow Sandals online on YOOX United Kingdom - 11506388QFMarkus Lupfer Sneakers - Women Markus Lupfer Sneakers online on YOOX United Kingdom - 11318466IB6Z8b0kBs Thorogood 6" Safety Moc Toe , Year-end special promotions Katy Perry The OraArcopedico Lighthouse You'll sparkle with each step you take in the graceful Lighthouse sandal by Arcopedico® , LifeStride Xripley Saddle up with the LifeStride Xripley. , Mezlan Concerto The handsome combination of patent and matte leather adds dimension to this dress oxford by MezlanWOMEN Ruthie Davis Edamame Stilletto Platforms First group of customers , Splendid Brown Janae Wedge Slip- On Sandals
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.