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.Vic Matiē Ankle Boot - Women Vic Matiē Ankle Boots online on YOOX United Kingdom - 11118698DX , Divine Follie Ankle Boot - Women Divine Follie Ankle Boots online on YOOX United Kingdom - 11562849LHMac Collection Sandals - Women Mac Collection Sandals online on YOOX United Kingdom - 11472696JESuperga 2790 LINEA UP AND WhitePretty Ballerinas MARILYN LATTICE blackIrregular Choice FUZZY PEG Purple / White / pinkColiac Martina Grasselli Ankle Boot - Women Coliac Martina Grasselli Ankle Boots online on YOOX United Kingdom - 11558601UCNila & Nila Ankle Boot - Women Nila & Nila Ankle Boots online on YOOX United Kingdom - 11495149NTIBIZA BEACH 5191 Azul SANDALIA BIO PARA MUJER , ladies Prada Nude Patent Block Sandals Modern modemens/womens Earth Origins Lilly Boots Modern mode , Dr. Scholl's Social - Original CollectionJoshua*S Sneakers - Men Joshua*S Sneakers online on YOOX United Kingdom - 11390997DVBoemos Boots - Men Boemos Boots online on YOOX United Kingdom - 11510837QGGeox Sneakers - Men Geox Sneakers online on YOOX United Kingdom - 11540233BG , Men/Women New Balance NYC Zantev3 Sneakers & Athletic New Balance business , Drunknmunky Sneakers - Women Drunknmunky Sneakers online on YOOX United Kingdom - 44828549UI , Pinko Sneakers - Women Pinko Sneakers online on YOOX United Kingdom - 11372109QEJeannot Loafers - Women Jeannot Loafers online on YOOX United Kingdom - 11270245FF , Avec Modération Sandals - Women Avec Modération Sandals online on YOOX United Kingdom - 11528241TV , Geox Ankle Boot - Women Geox Ankle Boots online on YOOX United Kingdom - 11541842GJ , Alexander Wang Espadrilles - Women Alexander Wang Espadrilles online on YOOX United Kingdom - 11385244EINike Women's Black Flyknits New Sneakers , Good world reputation Bloch Trinity Dance Sneaker , a wide range of products lady LifeStride Wedges Wholesale , leading the fashion Quiksilver Carver TropicsLADY Sergio Rossi Black/White Marine Sandals Exquisite workmanshipWOMEN Brown Aligator Sandals The highest quality materialValentino Blue Rockstud Men's Trainer Camo SneakersVince Black Paeyre Leather Skate 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.