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.Le Pepite Ankle Boot - Women Le Pepite Ankle Boots online on YOOX United Kingdom - 11528407FN , Vic Matiē Ankle Boot - Women Vic Matiē Ankle Boots online on YOOX United Kingdom - 11119622UBAlexander Mcqueen Ankle Boot - Women Alexander Mcqueen Ankle Boots online on YOOX United Kingdom - 11528156CJ , Lola Cruz Ankle Boot - Women Lola Cruz Ankle Boots online on YOOX United Kingdom - 11556012LDChelsea Paris Open-Toe Mules - Women Chelsea Paris Open-Toe Mules online on YOOX United Kingdom - 11463583LIBRUNATE 11159 FASHION FOOTWEAR FOR WOMENWOMENS Turquise/Pink/White/Black Python Sneakers Comfortable touchEssentiel Antwerp Rossignol - Ankle Boot - Women Essentiel Antwerp Ankle Boots online on YOOX United Kingdom - 11510719FKART III 1054 FASHION ANKLE BOOTS FOR WOMEN , men/women Athena Alexander Umma Heels Modern technology , Onitsuka Tiger by Asics California 78 EX , men's/women's Joie Hayleigh Boots New productmens/womens Pelle Moda Bonjour Heels superior , mens/womens Sam Edelman Jude Heels AffordableMen/Women Steve Madden Siftt Boots QueenslandConverse CHUCK TAYLOR ALL STAR LIFT - Trainers Colour: black/garnet/whitePolo Ralph Lauren EVA WHITLEBURY II - Pool shoes , Clarks Originals | Clarks desert boots in stone canvasColmar Sneakers - Men Colmar Sneakers online on YOOX United Kingdom - 11229020AJPuma Sneakers - Men Puma Sneakers online on YOOX United Kingdom - 11333692VSSuperga® Sneakers - Women Superga® Sneakers online on YOOX United Kingdom - 11486493JOPolice 883 Boots - Women Police 883 Boots online on YOOX United Kingdom - 11441034FEBams Ankle Boot - Women Bams Ankle Boots online on YOOX United Kingdom - 11385709BKRuco Line Sandals - Women Ruco Line Sandals online on YOOX United Kingdom - 11334911WG , 8gr36jBi SKECHERS Easy Going - Heightenspecial promotion Danner Quarry USALADY Zara Blue Formal Shoes a good reputation in the worldTheodora & Callum Multicolor 59 Yellow Purple Lobiarritz SandalsMiu Miu Vintage Periwinkle and Navy Blue Sandals , LADY Puma Camouflage Creeper Platforms Authentic guarantee
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.