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.Cesare P. Sandals - Women Cesare P. Sandals online on YOOX United Kingdom - 11443998QL , Vans Ultrarange Hi DX ZPR '18 , WOMENS Arche Citron Credo Sandals quality , NRGY Comet Running Shoes | Puma Black-Puma White , Coliac Martina Grasselli Ankle Boot - Women Coliac Martina Grasselli Ankle Boots online on YOOX United Kingdom - 11558601UC , WOMEN Tory Burch Black Suzy Sandals New market , Brunello Cucinelli Red Women's Ankle Strap SandalsWOMENS adidas Black Honey Mid Sneakers Cheap , man/woman RAYE Bunny Heels In short supplyAnna Field High heeled ankle boots , Polo Ralph Lauren REYNOLD - Moccasins , Lacoste CHAYMON - Trainers Colour: white/black , Clarks BATCOMBE TOP - Classic ankle boots Colour: dark tan , men's/women's Esprit Danika Flats Strong heat and wear resistance , men/women Circus by Sam Edelman Charlotte Flats Lightweight shoesman/woman SKECHERS Work Workshire - Condor Boots Seasonal promotionNike Sneakers - Men Nike Sneakers online on YOOX United Kingdom - 11465842KMKurt Geiger London | Kurt Geiger Marci leather tie up flat sandalsQuattrobarradodici Sneakers - Women Quattrobarradodici Sneakers online on YOOX United Kingdom - 11573670BGElata Loafers - Women Elata Loafers online on YOOX United Kingdom - 11506196TE , Nike Sneakers - Women Nike Sneakers online on YOOX United Kingdom - 11471420TQSkechers Sneakers - Women Skechers Sneakers online on YOOX United Kingdom - 11554787MOBelstaff Sandals - Women Belstaff Sandals online on YOOX United Kingdom - 11283373IR , Lemaré Ankle Boot - Women Lemaré Ankle Boots online on YOOX United Kingdom - 11532235KCNovelty Ankle Boot - Women Novelty Ankle Boots online on YOOX United Kingdom - 11464772QB , Lumberjack Ankle Boot - Women Lumberjack Ankle Boots online on YOOX United Kingdom - 11320804AS , Osvaldo Rossi Sandals - Women Osvaldo Rossi Sandals online on YOOX United Kingdom - 11322085JU , Shopping promotion Pikolinos Le Mans 838-8657Long-term reputation Frye Melissa ButtonLADY Manolo Blahnik Lilac Formal Shoes New style ,
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.