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.Lea Foscati Ankle Boot - Women Lea Foscati Ankle Boots online on YOOX United Kingdom - 11094785KD , L'f Shoes Sneakers - Women L'f Shoes Sneakers online on YOOX United Kingdom - 11448935LHPhilipp Plein Loafers - Women Philipp Plein Loafers online on YOOX United Kingdom - 11454470IB , AVATAR Amanet FASHION BOOTS FOR WOMEN , lady Hermès Orange Sandals Exquisite workmanshipBates Footwear 8" Tactical Sport Composite Toe Side ZipLADY Touch Ups 622 Stacy Sandals Bright colors , men's/women's Sbicca Prismatic Boots Wear resistantmen/women SAS Classic Loafers Quality First , ALDO CADILINNA - T-bar sandalsUnder Armour UA Speedform Fortis GR , Society CULT TASSEL LOAFER - Slip-ons - brownSatorisan Sneakers - Men Satorisan Sneakers online on YOOX United Kingdom - 11119703JN , Men/Women Eastland 1955 Edition Freeport USA Boat Eastland 1955 Edition Modern design , Dorothy Perkins Wide Fit WIDE FIT DALLAS - High heels , Men/Women Walking Cradles Bronwyn Flats a wide range of products , Ghōud Venice Sneakers - Men Ghōud Venice Sneakers online on YOOX United Kingdom - 11545385FLFabiano Ricci Sneakers - Men Fabiano Ricci Sneakers online on YOOX United Kingdom - 11375143BG , ASOS DESIGN | ASOS DESIGN Wide Leg Kelby flat elastic over the knee bootsUnisa Loafers - Women Unisa Loafers online on YOOX United Kingdom - 11521091KL , Coclico Sandals - Women Coclico Sandals online on YOOX United Kingdom - 11560225FX , Tod's Boots - Women Tod's Boots online on YOOX United Kingdom - 11569126JEF.Lli Bruglia Court - Women F.Lli Bruglia Courts online on YOOX United Kingdom - 11408584BDHogan Flip Flops - Women Hogan Flip Flops online on YOOX United Kingdom - 11123777CRRacine Carrée Sandals - Women Racine Carrée Sandals online on YOOX United Kingdom - 11332379BN , FkPxWGp8 Dr. Martens Work Hylow SDReport Signature Black Patent Leather Urban Outfitters High Tops Sneakers 1/2 SneakersValentino Black Leather and Calfhair Rockstud Ankle Strap SandalsTory Burch Black Tb Miller 30mm Sandals , LADY Michael Antonio Beige Thorstein Sandals economical
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.