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.Windsor Smith Ankle Boot - Women Windsor Smith Ankle Boots online on YOOX United Kingdom - 11482690HRWindsor Smith Ankle Boot - Women Windsor Smith Ankle Boots online on YOOX United Kingdom - 11267662UVTosca Blu Shoes Sneakers - Women Tosca Blu Shoes Sneakers online on YOOX United Kingdom - 11491205FQMinnetonka Kilty Moc - Loafers - Women Minnetonka Loafers online on YOOX United Kingdom - 11227484BRLaura Biagiotti Sneakers - Women Laura Biagiotti Sneakers online on YOOX United Kingdom - 11504351MRMjus Ankle Boot - Women Mjus Ankle Boots online on YOOX United Kingdom - 11418730OFNew Balance 996 Suede - Textile - Sneakers - Women New Balance Sneakers online on YOOX United Kingdom - 11195648JSPellettieri Di Parma Boots - Men Pellettieri Di Parma Boots online on YOOX United Kingdom - 11505357VQ , woman Giani Bernini Black Nadir Wedges uppers , One star leather trainers , pink, ConverseThe North Face Base Camp XtraFoam Flip-Flop , men's/women's Dolce Vita Harvyy Heels auction , man/woman Baretraps Jackeline Flats Popular recommendationVioleta by Mango Mules Colour: blueman/woman Adidas Indoor Super Shoes Schuhe New Listing , men/women Frye Nora Mid Pull-On Boots Rich design , men/women adidas Alphabounce Aramis Sneakers & Athletic adidas Elegant and sturdy packagingRoberto Botticelli Sneakers - Men Roberto Botticelli Sneakers online on YOOX United Kingdom - 11515361KBmen/women Lacoste Hydez 318 1 P Sneakers & Athletic Lacoste The highest quality materialAquarelle Sandals - Women Aquarelle Sandals online on YOOX United Kingdom - 11471896II , Lenora Loafers - Women Lenora Loafers online on YOOX United Kingdom - 11488199NCL.B.K. Boots - Women L.B.K. Boots online on YOOX United Kingdom - 11564053NS , Bikkembergs Sneakers - Women Bikkembergs Sneakers online on YOOX United Kingdom - 11332654HG , Angela George Sandals - Women Angela George Sandals online on YOOX United Kingdom - 11501519UJElisabetta Franchi Sandals - Women Elisabetta Franchi Sandals online on YOOX United Kingdom - 11127619FD , Prada Sport Sneakers - Women Prada Sport Sneakers online on YOOX United Kingdom - 11047606RS , Lola Cruz Sandals - Women Lola Cruz Sandals online on YOOX United Kingdom - 11344984WC , UWDlpp7u Ariat Groundbreaker WST Metguard STBaby Phat Pink White & Brown Throw Back Boat Style Tennis Sneakers , Ladies Kenneth Cole Black Gretchen Sandals Crazy Price, Birmingham
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.