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.Toni Pons Ankle Boot - Women Toni Pons Ankle Boots online on YOOX United Kingdom - 11517261HRMaison Shoeshibar Aya - Sandals - Women Maison Shoeshibar Sandals online on YOOX United Kingdom - 11476718KV , Paloma Barceló Ballet Flats - Women Paloma Barceló Ballet Flats online on YOOX United Kingdom - 11501208LHGianni Marra Court - Women Gianni Marra Courts online on YOOX United Kingdom - 11103412ODTory Burch Snake Embossed Slides SandalsJimmy Choo Brown/Gold/Turquoise Embellished Resort SandalsShy By Arvid Yuki Sneakers - Women Shy By Arvid Yuki Sneakers online on YOOX United Kingdom - 11556864MRCALIFERS Botines Mujer Piel Daily Star Ja417c67-rojo FASHION FOOTWEAR FOR WOMEN , MISS Prada Black Double Espadrille Platforms First class in his class , Nike Black Pink Silver Force Sky Hi Sneakers , womens Prada Natural Python Platforms Call firstmen/women Lazamani Trainers Excellent valuemen/women Kappa Trainers Reputation first , men/women Steve Madden Dalston Boots reasonable priceman/woman Mark Nason Cole Oxfords Complete specifications , men/women Walking Cradles Devin Boots cheap , Nike SB Zoom Stefan Janoski Canvas , Men/Women L’Autre Chose Sandals Colour: pink Reasonable pricemen/women Report Yachel Heels Modern and stylish fashionWinsor Boots - Men Winsor Boots online on YOOX United Kingdom - 11550998BUmen's/women's Propet Travel Walker II Sneakers & Athletic Propet value , Louis Leeman Sneakers - Men Louis Leeman Sneakers online on YOOX United Kingdom - 11542250IPO.X.S. Sneakers - Women O.X.S. Sneakers online on YOOX United Kingdom - 11015478PS , Emporio Armani Sandals - Women Emporio Armani Sandals online on YOOX United Kingdom - 11423495IG , Cesare Paciotti Loafers - Men Cesare Paciotti Loafers online on YOOX United Kingdom - 11506820GSMISS Nike White & Gold Sneakers Elegant and robust menu , Nike White and Silver Women's with Concealed Heel Sneakers , Onesole Black/Cork - Interchangeable Casual Soft Step Sandals , LADY Burberry Brown Maisie Sandals Very good color , woman Vince Camuto Beige Dress Sandals Flagship store
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.