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.Giancarlo Paoli Ankle Boot - Women Giancarlo Paoli Ankle Boots online on YOOX United Kingdom - 11541875PF , Royal Republiq Ankle Boot - Women Royal Republiq Ankle Boots online on YOOX United Kingdom - 11574159PC , Manila Grace Ankle Boot - Women Manila Grace Ankle Boots online on YOOX United Kingdom - 11423264JF , Melluso Ankle Boot - Women Melluso Ankle Boots online on YOOX United Kingdom - 11505449RT , BRYAN 308 ZAPATO CONFORT DE MUJERJolie By Edward Spiers Ballet Flats - Women Jolie By Edward Spiers Ballet Flats online on YOOX United Kingdom - 11423749LF , Via Roma 15 Ankle Boot - Women Via Roma 15 Ankle Boots online on YOOX United Kingdom - 11505647JB , Nike Air Max Thea - Sneakers - Women Nike Sneakers online on YOOX United Kingdom - 11438326DO , New Balance Womens Zante - Sneakers - Women New Balance Sneakers online on YOOX United Kingdom - 11104097BBLEMON JELLY ISBEL - Wellies Colour: black , mens/womens Dingo Dove Boots Excellent quality , Men/Women Alegria Anah Sandals Brand feastAdidas Barricade 2018 Ltd Edition ShoesBirkenstock BOSTON - Slippers Colour: habanaKennel & Schmenger Elle Pearl Slide , Guess Boots - Men Guess Boots online on YOOX United Kingdom - 11492705UM , Imac Boots - Men Imac Boots online on YOOX United Kingdom - 11549155OJAdidas Sneakers - Men Adidas Sneakers online on YOOX United Kingdom - 11371082RF , Doucal's Loafers - Men Doucal's Loafers online on YOOX United Kingdom - 11544320VN , River Island | River Island heeled sandals with block heel in gray , Adidas Reebok Classic PHASE 1 PRO - Trainers - terrain grey/chalk/pink , men/women ALDO Methuen Sneakers & Athletic ALDO Economical and practicalMen/Women Clarks Heavenly Star Heels High quality and low overhead , Leather Crown Sneakers - Men Leather Crown Sneakers online on YOOX United Kingdom - 11490764CBLumberjack Sneakers - Women Lumberjack Sneakers online on YOOX United Kingdom - 11320805VVMagrit Court - Women Magrit Courts online on YOOX United Kingdom - 11566404CL , Roger Vivier Court - Women Roger Vivier Courts online on YOOX United Kingdom - 11503975II , Laura Biagiotti Sandals - Women Laura Biagiotti Sandals online on YOOX United Kingdom - 11556417QE , lady Prada Gold Flower Sneakers diversityWOMENS Franco Sarto Navy Wedges Strong heat and heat resistance
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.