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.Converse All Star Sneakers - Women Converse All Star Sneakers online on YOOX United Kingdom - 11580668UT , Adidas Originals Campus - Sneakers - Men Adidas Originals Sneakers online on YOOX United Kingdom - 11533576NX , Burberry Ankle Boot - Women Burberry Ankle Boots online on YOOX United Kingdom - 11449188WEArkk Copenhagen Scorpitex S-E15 - Sneakers - Men Arkk Copenhagen Sneakers online on YOOX United Kingdom - 11379424DUCruyff RECOPA UNDERLAY - Trainers Colour: navy bluemen's/women's Sesto Meucci Samira Boots use , men's/women's Superfeet Palisade Flats cheap priceadidas Originals FALCON - TrainersGARMENT PROJECT SKY - Trainers - navy , Mizuno WAVE DAICHI 3 - Trail running shoes - folkstone gray/black/flame orange , mens/womens Office FARLEY - Slip-ons Elegant and stable packaging , mens/womens adidas Originals N-5923 W Sneakers & Athletic adidas Originals wholesale , men's/women's GUESS Tracker Sneakers & Athletic GUESS Modern and elegant fashion , Ernesto Dolani Boots - Men Ernesto Dolani Boots online on YOOX United Kingdom - 11505583XKWally Walker Boots - Men Wally Walker Boots online on YOOX United Kingdom - 11073178SF , Gaimo Espadrilles - Women Gaimo Espadrilles online on YOOX United Kingdom - 11112582PH , Lea-Gu Court - Women Lea-Gu Courts online on YOOX United Kingdom - 11559373AT , Roberto Festa Loafers - Women Roberto Festa Loafers online on YOOX United Kingdom - 11455069LIAlberta Ferretti Sandals - Women Alberta Ferretti Sandals online on YOOX United Kingdom - 11326820AVRodo Ankle Boot - Women Rodo Ankle Boots online on YOOX United Kingdom - 11573636FN , Giuseppe Zanotti Boots - Women Giuseppe Zanotti Boots online on YOOX United Kingdom - 11414220RW , Affordable Hey Dude Wally Knit , Quality queen DC Pure High-Top WCprofessional design Franco Sarto CarolynnHigh quality and cheap Reef Discovery LEFENTY PUMA by Rihanna Grey Suede Heart Satin Sneakers SneakersWOMEN ALDO Black Spike Formal Shoes Orders are welcome , Donald J. Pliner White Asian Dragon Embroidery Sandals , MISS Kenneth Cole Reaction Taupe Wedges Bright colors , WOMENS Vera Wang Burgundy Sparkly Platforms Strong value
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.