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.Giuseppe Zanotti Ankle Boot - Women Giuseppe Zanotti Ankle Boots online on YOOX United Kingdom - 11212431CSNine West Pruce - Sandals - Women Nine West Sandals online on YOOX United Kingdom - 11484227VNLADY Guess Black Sparkle Platforms promotion , Women's Sam Edelman Flats Sandals brand , Smash Platform Suede Women's Sneakers | Puma Black-Puma White | PUMA Platforms | PUMA United States , AVID evoKNIT Mosaic Evolution Sneakers | PWhite-PBlack-Sodalite Blue | PUMA Men's Picks | PUMA United States , Ovye' By Cristina Lucchi Open-Toe Mules - Women Ovye' By Cristina Lucchi Open-Toe Mules online on YOOX United Kingdom - 11562895CKadidas Green Derrick Rose 3 South Sneakers , Nike Sportswear PRESTO FLY SE - Trainersmen's/women's Yellow Box Premium Oudry Heels businessmen/women Frye Dean Harness Boots Different styles , Adidas H?gl Slip-ons - dark blueNew Look PLIMSOLL - Slip-onsGentle Souls by Kenneth Cole Parkermens/womens CC Corso Como Sydney Heels Win highly appreciatedTed Baker PEPPAH - Trainers - dark bluemen's/women's Clarks Capler Plain Oxfords Suitable for color , Geox Boots - Men Geox Boots online on YOOX United Kingdom - 11427261ECAdidas Steve Madden SARAH - High heeled sandals - black , Cuoieria Espadrilles - Women Cuoieria Espadrilles online on YOOX United Kingdom - 11363907HO , Versace Sneakers - Women Versace Sneakers online on YOOX United Kingdom - 11564586JSEbarrito Sneakers - Women Ebarrito Sneakers online on YOOX United Kingdom - 11516705EB , Mimmu Loafers - Women Mimmu Loafers online on YOOX United Kingdom - 11533303OF , Deimille Sandals - Women Deimille Sandals online on YOOX United Kingdom - 11562341KK1725.A Loafers - Women 1725.A Loafers online on YOOX United Kingdom - 11570083JXDeimille Court - Women Deimille Courts online on YOOX United Kingdom - 11551955UR , Lola Cruz Sandals - Women Lola Cruz Sandals online on YOOX United Kingdom - 11345623DLWhich One Espadrilles - Men Which One Espadrilles online on YOOX United Kingdom - 11526629GV , Opening Ceremony Black Cici Metal-98 Sneakers , Stuart Weitzman Nude Bambina Nappa Nearlynude Sandals
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.