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.La Femme Plus Sandals - Women La Femme Plus Sandals online on YOOX United Kingdom - 11535708NRPal Zileri Concept Boots - Men Pal Zileri Concept Boots online on YOOX United Kingdom - 11499817FLASOS DESIGN | ASOS DESIGN loafers in tan and black leather with natural sole and fringe detailGianni Marra Sandals - Women Gianni Marra Sandals online on YOOX United Kingdom - 11103446MT , Dolce&Gabbana Light Beige Dolce & Gabbana Leather Slide Low Sandals , Clyde Stripes Men's Sneakers | Puma White-Flame Scarlet , Hogan By Karl Lagerfeld Ankle Boot - Women Hogan By Karl Lagerfeld Ankle Boots online on YOOX United Kingdom - 11235230RD , Roberto Della Croce Sandals - Women Roberto Della Croce Sandals online on YOOX United Kingdom - 11411310LUNila & Nila Sneakers - Women Nila & Nila Sneakers online on YOOX United Kingdom - 11476842UAAlberto Venturini Ballet Flats - Women Alberto Venturini Ballet Flats online on YOOX United Kingdom - 11488134BT , mens/womens CLOSED Trainers Good market , Men/Women Vaneli Arty Flats Economical and practical , mens/womens Sergio Rossi Tea Boots Primary quality , man/woman Donald J Pliner Otis-01 Boots TRUEPeter Kaiser LOTTA - Ballet pumps , ALDO TIFANIA - High heeled sandals , Nunn Bush Shawn Plain Toe Oxford , Converse CHUCK TAYLOR ALL STAR - Trainers Colour: egret/metallic egret/egret , Chloé Loafers - Women Chloé Loafers online on YOOX United Kingdom - 11461801TLButtero® Loafers - Men Buttero® Loafers online on YOOX United Kingdom - 11194730GF , Munich Sneakers - Men Munich Sneakers online on YOOX United Kingdom - 11454565FWTermans Loafers - Women Termans Loafers online on YOOX United Kingdom - 11557138HXApologie Court - Women Apologie Courts online on YOOX United Kingdom - 11548242DVRodolphe Menudier Boots - Women Rodolphe Menudier Boots online on YOOX United Kingdom - 11505612OJ , L'arianna Open-Toe Mules - Women L'arianna Open-Toe Mules online on YOOX United Kingdom - 11480424GK , Emanuela Passeri Sandals - Women Emanuela Passeri Sandals online on YOOX United Kingdom - 11571966MBExport Clarks Ashland Spin QLADY Stuart Weitzman Brown Wedges in short supply , womens adidas X Yeezy Multiple Sneakers Fine workmanship , Saint Laurent White Sl/01 Court Leather Sneakers ,
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.