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.George J. Love Sneakers - Women George J. Love Sneakers online on YOOX United Kingdom - 11403613CVDolce & Gabbana Sneakers - Women Dolce & Gabbana Sneakers online on YOOX United Kingdom - 11453730UH , Lola Cruz Boots - Women Lola Cruz Boots online on YOOX United Kingdom - 11383089TP , Prada Nero Black Antic Liberty Sandals , Adidas Originals By White Mountaineering Sneakers - Men Adidas Originals By White Mountaineering Sneakers online on YOOX United Kingdom - 11453167OIGolden Goose Deluxe Brand Sneakers - Women Golden Goose Deluxe Brand Sneakers online on YOOX United Kingdom - 11506993ID , Bibi Lou Ankle Boot - Women Bibi Lou Ankle Boots online on YOOX United Kingdom - 11264542IG , Women's BCBGeneration Chunky Wedges New products in 2385Tory Burch Camel Tan Britton 12138329 SandalsPeter Kaiser SABRINE - Classic heelsmen's/women's Joie Reeve Boots Personalization trendFaith AIR - Slip-ons Colour: blackMen/Women Cream MAY - Espadrilles Beautiful designMen/Women Adrianna Papell Vonia Heels the most economicalmen's/women's CL By Laundry Immortal Heels Fashion patternmen/women Badgley Mischka Kelly II Heels have fun , men/women Report Ira Clogs & Mules Good design , Teva ORIGINAL UNIVERSAL MOTO - Walking sandals - wild dove , Adidas DNA Footwear BV High heeled ankle boots - grey , mens/womens Body Glove Dynamo Ribcage Sneakers & Athletic Body Glove Elegant and stable packaging , Lerre Boots - Women Lerre Boots online on YOOX United Kingdom - 11508773XOBlumarine Court - Women Blumarine Courts online on YOOX United Kingdom - 11505967WPTattoo Loafers - Women Tattoo Loafers online on YOOX United Kingdom - 11520333PK , Ras Sneakers - Women Ras Sneakers online on YOOX United Kingdom - 11572585UL , Fiorangelo Court - Women Fiorangelo Courts online on YOOX United Kingdom - 11291495HOLe Silla Court - Women Le Silla Courts online on YOOX United Kingdom - 11050364IK , Innovative design Lucky Brand Bylandowoman Tory Burch Brown Beckett Wedges Diverse new designLADY Zara Black Platforms a wide range of products , Prada Platino Gold Metallic Single Band 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.