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.Emanuela Passeri Ankle Boot - Women Emanuela Passeri Ankle Boots online on YOOX United Kingdom - 11444664HW , Acne Studios Ankle Boot - Women Acne Studios Ankle Boots online on YOOX United Kingdom - 11523818VBRuco Line Sneakers - Women Ruco Line Sneakers online on YOOX United Kingdom - 11334755JFSOTOALTO Indico FASHION SANDALS FOR WOMENPONS QUINTANA 6792 SLIP-ON PARA MUJERSee By Chloé Ankle Boot - Women See By Chloé Ankle Boots online on YOOX United Kingdom - 11265889OS , YOKONO Lucca 031 Negro WEDGE ANKLE BOOTS FOR WOMEN , womens Dolce Vita Black Pasha Sandals Stable qualityCLARKS Un Loop ZAPATO CONFORT DE MUJERPepe Jeans MADDOX RING - Cowboy/Biker boots , SJP by Sarah Jessica Parker CharlieAdidas Dune London BELLOWES - Classic heels - red , Adidas SPM NANO - High heeled boots - cognac , men's/women's Avia Avi-Cube Sneakers & Athletic Avia Fashion dynamicAdidas Even&Odd High heeled boots - red , Mot-Clè Court - Women Mot-Clè Courts online on YOOX United Kingdom - 11486692UVHogan Boots - Men Hogan Boots online on YOOX United Kingdom - 11541674BL , Adidas Tiger of Sweden NEXOE - Sandals - bright orangeMarco Ferretti Loafers - Men Marco Ferretti Loafers online on YOOX United Kingdom - 11481214WG , Gioseppo Sandals - Women Gioseppo Sandals online on YOOX United Kingdom - 11575833SI , Moma Loafers - Women Moma Loafers online on YOOX United Kingdom - 11411860UR , Ernesto Dolani Boots - Women Ernesto Dolani Boots online on YOOX United Kingdom - 11506442XDLola Cruz Sneakers - Women Lola Cruz Sneakers online on YOOX United Kingdom - 11564067CR , fBm2Ykhx Reebok Lifestyle Classic Nylon W , Beautiful color Eric Michael Kelly , We have won praise from our customers. Scott Hawaii Papio , ladies Jeffrey Campbell Tribal Romana Sandals Excellent craft , lady Frye Black 234567 Wedges New design , Ladies Nina Browns Nadja Sandals Attractive fashion , LADY Dolce&Gabbana Navy Patent Leather Pumps Wholesale
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.