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.Bailarina By Ska Sneakers - Women Bailarina By Ska Sneakers online on YOOX United Kingdom - 11466712JT , Stella Mccartney Ankle Boot - Women Stella Mccartney Ankle Boots online on YOOX United Kingdom - 11484479RP , Vivienne Westwood Court - Women Vivienne Westwood Courts online on YOOX United Kingdom - 11475793ERPUMA x SHANTELL MARTIN Clyde Clear Sneakers | Puma White-Puma White | PUMA PUMA x SHANTELL MARTIN | PUMA United StatesVans Vn0a38enoak1Ua Authentic 44 Dx Anaheim Factory - Sneakers - Women Vans Sneakers online on YOOX United Kingdom - 11576970MT , New Balance Pace Team Nb Pack - Sneakers - Men New Balance Sneakers online on YOOX United Kingdom - 11089078CQ , Adidas Originals Nmd_R1 Stlt Pk - Sneakers - Women Adidas Originals Sneakers online on YOOX United Kingdom - 11414663MUTosca Blu Shoes Ankle Boot - Women Tosca Blu Shoes Ankle Boots online on YOOX United Kingdom - 11468213SB , Women's SCHUTZ Forrest Green Akhalya Platforms Nice appearanceladies Isabel Marant Anthracite Bobby Sneakers Moderate price , woman Silver John Sneakers Easy to clean surfaceWomen's Stuart Weitzman Diplille Platforms Elegant appearanceCole Haan Terrin Black Wedge 40mmmens/womens ALDO Livley Boots Contrary to the same paragraph , men/women Merrell Downtown Slide Buckle Sandals Low price , ASOS DESIGN | ASOS DESIGN Denial chunky sneakers , Kurt Geiger London | Kurt Geiger London Palermo loafers in navy suedeValetti Sandals - Women Valetti Sandals online on YOOX United Kingdom - 11474285MJCavallini Loafers - Women Cavallini Loafers online on YOOX United Kingdom - 11488110XL , Nike Sneakers - Women Nike Sneakers online on YOOX United Kingdom - 11329537OLCampomaggi Sandals - Women Campomaggi Sandals online on YOOX United Kingdom - 11578996OVRock Spring Sneakers - Women Rock Spring Sneakers online on YOOX United Kingdom - 11508475JIRuco Line Sneakers - Women Ruco Line Sneakers online on YOOX United Kingdom - 11496044EWGioseppo Flip Flops - Women Gioseppo Flip Flops online on YOOX United Kingdom - 11575855CKTory Burch Cream Flip Flop Sandals , sfLhQ2jB Blue by Betsey Johnson Lucy , Crazy price Stacy Adams Kimballladies Dior Gladiatior Extreme Sandal Platforms New products in 2364 , Jimmy Choo Black Patent Leather Pence Thong Cork SandalsLadies Tory Burch Raya Mule Wedges Pleasant appearance
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.