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.Bates Footwear GX-8 Desert Composite Toe , Sam Edelman Black Angela Gladiator Sandals , Shy By Arvid Yuki Ankle Boot - Women Shy By Arvid Yuki Ankle Boots online on YOOX United Kingdom - 11498976IT , Open Closed Shoes Ankle Boot - Women Open Closed Shoes Ankle Boots online on YOOX United Kingdom - 11569550RSRIVIERABONUCCI Sandalias Plataforma Mujer Piel Ja1103g46-negro FASHION LOAFERS FOR WOMENladies Valentino Red Rockstud Bow Pumps Suitable for colorKAPPA 303n9l0 Fantom 953 Grey-pink TRAINERS FOR WOMENGO SEXY S048850004bvg LOW-TOP TRAINERS FOR WOMEN , WOMENS Prada Champagne Formal Shoes International choiceWOMENS Giuseppe Zanotti Pink/Green Sandals Low costsBoxfresh ACEUS - Trainers - grey , Adidas New Balance MS247 - Trainers - deep jade , men/women s.Oliver Cowboy/Biker boots Colour: black flagship store , man/woman etnies Jameson SLW Sneakers & Athletic etnies durableAdidas adidas Originals SAMBA - Trainers - white , man/woman Cole Haan Graydon Chukka Boots various kinds , Prada Sandals - Women Prada Sandals online on YOOX United Kingdom - 11490683BUAsics Sneakers - Men Asics Sneakers online on YOOX United Kingdom - 11244619HJMoma Boots - Men Moma Boots online on YOOX United Kingdom - 11508831OVmen/women Ted Baker Deyor Sneakers & Athletic Ted Baker High-quality materialsVans Sneakers - Women Vans Sneakers online on YOOX United Kingdom - 11280655KPAsh Sneakers - Women Ash Sneakers online on YOOX United Kingdom - 11557822BP , Casadei Sandals - Women Casadei Sandals online on YOOX United Kingdom - 11529104SF , Love Moschino Sneakers - Women Love Moschino Sneakers online on YOOX United Kingdom - 11451293OTGiuseppe Zanotti Sneakers - Women Giuseppe Zanotti Sneakers online on YOOX United Kingdom - 11546974BF , Aquatalia Deena When the weather starts to cool keep your style hot with the fierce Aquatalia Deena booties.women Skechers Blac Sn48033 Sneakers Won highly esteemed and widely trusted at home and abroadWomen's Vince Black Cori Sneaker Sneakers Modern designwomen Prada Brown Xxx Sandals Beautiful design , Women's Munro American Brown Sandals Fine workmanship
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.