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.Alberto Guardiani Ankle Boot - Women Alberto Guardiani Ankle Boots online on YOOX United Kingdom - 11560945DN , Adidas By Kolor Sneakers - Men Adidas By Kolor Sneakers online on YOOX United Kingdom - 11505160OU , Steve Madden Sandals - Women Steve Madden Sandals online on YOOX United Kingdom - 11355375PP , ladies Beverly Feldman Grey Sandals Characteristicladies Marchesa Gold Grace Sandals trendyWOMENS Tory Burch White Kristen Wedges Modern and stylish fashionNike Womens Zoom Cage Mindy Fog New Sneakers , WOMENS Nine West Silver Formal Shoes Good qualitymen/women Touch Ups Dee Heels Durable service , man/woman ALDO Cirelle Boots Various latest designsmen/women Clarks Aria Maryjane Flats featureECCO Golf BIOM Hybrid 2 GTX , Adidas New Balance WL520 - Trainers - dusted peach , Men/Women Billabong March to The Sea Boots Outstanding function , Men/Women Sam Edelman Olivie 4 Sandals Charming designSuperga® Sneakers - Men Superga® Sneakers online on YOOX United Kingdom - 11378397HX , Mizuno REBULA V1 JAPAN - Moulded stud football boots Colour: white/black/silverDel Toro Boots - Men Del Toro Boots online on YOOX United Kingdom - 11560015NI , Mangano Court - Women Mangano Courts online on YOOX United Kingdom - 11422142IH , Camper Sneakers - Women Camper Sneakers online on YOOX United Kingdom - 11356998EM , Alaïa Ankle Boot - Women Alaïa Ankle Boots online on YOOX United Kingdom - 11533481WO , Giuseppe Zanotti Sneakers - Women Giuseppe Zanotti Sneakers online on YOOX United Kingdom - 44940285OBbest seller G by GUESS Banx5 , Brand SOLE / SOCIETY Dawnina , Harley-Davidson Eastfield The Harley-Davidson Eastfield sneaker makes sure you with ease throughout your work day with its tough yet comfortable design , Sam Edelman White Red New Carleigh Platform Espadrille Sneaker Sandals , woman Ash Tan/Nude Bowie Sneakers Wedges Stylish and funnyWomen's Nike Mens Sprdn New Sneakers Online shopladies Lanvin Black Formal Shoes Good qualityLadies Valentino Red Cagepump Rockstud Pumps Cheap
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.