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.Laboratorigarbo Ankle Boot - Women Laboratorigarbo Ankle Boots online on YOOX United Kingdom - 11461709KGTrussardi Jeans Sandals - Women Trussardi Jeans Sandals online on YOOX United Kingdom - 11515586KD , PIKOLINOS W5c-8734 FASHION FOOTWEAR FOR WOMEN , Philosophy Di Lorenzo Serafini Court - Women Philosophy Di Lorenzo Serafini Courts online on YOOX United Kingdom - 11553556OFKAPPA 3032dg0 Keysy 908 White LOW-TOP TRAINERS FOR WOMEN , man/woman Easy Spirit Neota Loafers Excellent performancemen's/women's Nine West Mary Flats Many varieties , men's/women's Allrounder by Mephisto Tabasa Sandals auction , Adidas PERLATO Sandals - luxor noir/kissman/woman Vaneli Amalee Heels Durable service , men's/women's Chinese Laundry Tatiana Heels Characteristics , Society YAGER ZIP BOOT - Cowboy/Biker boots - silverErika Rocchi JACK - Classic ankle boots Colour: nero , men's/women's Kenneth Cole New York Mylah Heels modernmen/women Cole Haan Phoenix Ballet Flats Various stylesUltraboost x running shoes , blue, Adidas Performance , Adidas Zadig & Voltaire NEO KEITH - Trainers - blanc , La Sportiva TEMPESTA GTX - Trail running shoes - slate/pumpkin , Hogan Rebel Sneakers - Men Hogan Rebel Sneakers online on YOOX United Kingdom - 11541078XGMalagoli M. Loafers - Men Malagoli M. Loafers online on YOOX United Kingdom - 11462212ERUnder Armour THREADBORNE VELOCITI - Neutral running shoes - black/city khaki/metallic faded gold , man/woman Badgley Mischka Mareva Heels Highly appreciated and widely trusted in and outMalìparmi Boots - Women Malìparmi Boots online on YOOX United Kingdom - 11467731UW , Ghōud Venice Sneakers - Women Ghōud Venice Sneakers online on YOOX United Kingdom - 11497724FFRuco Line Sneakers - Women Ruco Line Sneakers online on YOOX United Kingdom - 11492038XAPaloma Barceló Court - Women Paloma Barceló Courts online on YOOX United Kingdom - 44759041UKBrooks White/Fuchsia/Midnight Women's Adrenaline 14 Sneakerslow cost Corral Boots A3304Stuart Weitzman Gold Glitter Strappy Slingback Cork Wedge Sandals , WOMENS Saint Laurent Beige Tribute 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.