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.Lea Foscati Ankle Boot - Women Lea Foscati Ankle Boots online on YOOX United Kingdom - 11285469KU , Giuseppe Zanotti Ankle Boot - Women Giuseppe Zanotti Ankle Boots online on YOOX United Kingdom - 11488061VTWhat For Ankle Boot - Women What For Ankle Boots online on YOOX United Kingdom - 11266763IK , Dolce & Gabbana Sandals - Women Dolce & Gabbana Sandals online on YOOX United Kingdom - 11159113PA , Polo Ralph Lauren Hanford-Ne - Sneakers - Men Polo Ralph Lauren Sneakers online on YOOX United Kingdom - 11417344VOladies Valentino Black Tango Embelished Pumps Different products , Marco Tozzi Cowboy/Biker boots Colour: black antic , men/women Rachel Zoe Tara Boots bargainDr. Martens Hazil Tall Slouch Boot , McQ Alexander McQueen BOOTYE - Classic ankle boots Colour: neromens/womens Merrell Downtown Slide Buckle Nubuck Sandals High-quality materialsMen/Women David Tate Opera II Heels reasonable price , Nike Sneakers - Men Nike Sneakers online on YOOX United Kingdom - 11124431VG , New Balance FRESH FOAM CRUZ - Neutral running shoes - burgundy , Adidas adidas Originals PROPHERE - Trainers - trace maroon/noble maroon/solar redNike Sportswear AIR FORCE 1 07 - Trainers - blackThe Editor Sneakers - Men The Editor Sneakers online on YOOX United Kingdom - 11534438PV , Cafènoir Sneakers - Women Cafènoir Sneakers online on YOOX United Kingdom - 11439854AMRed(V) Loafers - Women Red(V) Loafers online on YOOX United Kingdom - 11463998LHPremier Court - Women Premier Courts online on YOOX United Kingdom - 11215293BFSpringa Sneakers - Women Springa Sneakers online on YOOX United Kingdom - 11456661NH , What For Loafers - Women What For Loafers online on YOOX United Kingdom - 11545626RH , Just Cavalli Sandals - Women Just Cavalli Sandals online on YOOX United Kingdom - 44908299MAStuart Weitzman Sandals - Women Stuart Weitzman Sandals online on YOOX United Kingdom - 11561321FT , Manuel Barceló Sneakers - Women Manuel Barceló Sneakers online on YOOX United Kingdom - 11332155OP , Women's Dark Brown Formal Shoes Really , Environmentally friendly Iron Age Hauler Pull-OnLADY Zara Beige Leather High Sandals Highly praised and appreciated by the audience of consumers , Jimmy Choo Blue Miami Coarse Glitter Sneakers SneakersWOMENS Via Spiga Camel/Tan Latanya Wedges New product ,
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.