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.Donna Più Ankle Boot - Women Donna Più Ankle Boots online on YOOX United Kingdom - 11502896CJ , Cesare Paciotti 4Us Sneakers - Women Cesare Paciotti 4Us Sneakers online on YOOX United Kingdom - 11455901NS , Converse All Star Sneakers - Men Converse All Star Sneakers online on YOOX United Kingdom - 11209215JU , Atp Atelier Sandals - Women Atp Atelier Sandals online on YOOX United Kingdom - 11176121WCElizabeth and James Black None SneakersVans SK8-HI Marine / Black , Puma Basket Platform Vr Wn's - Sneakers - Women Puma Sneakers online on YOOX United Kingdom - 11315236OKMARIA MARE 66985 C40433 Marino FASHION SANDALS FOR WOMEN , men/women Dolce Vita Celita Sandals Durable service , SPM CARJOSE - Classic ankle boots , Adidas s.Oliver Sandals - grey/silver , Kenneth Cole New York Design 10461Chie Mihara INOU - Classic heels Colour: talo naso/ante grapemens/womens Osiris Mesa Sneakers & Athletic Osiris Charming design , Pinko MANDARINO - High heeled sandals Colour: black , men's/women's SKECHERS GOTrail - Adventure Sneakers & Athletic SKECHERS Complete specifications , Men/Women Creative Recreation Castucci Sneakers & Athletic Creative Recreation Lush design , Adidas Nike SB STEFAN JANOSKI MAX - Trainers - black/whiteMen/Women Sesto Meucci Eulah Loafers Strong heat and heat resistanceMariga Ankle Boot - Women Mariga Ankle Boots online on YOOX United Kingdom - 11513461NN , La Siesta Espadrilles - Women La Siesta Espadrilles online on YOOX United Kingdom - 11574735EPChie Mihara Court - Women Chie Mihara Courts online on YOOX United Kingdom - 11549844IRChristian Louboutin Green Louis Sneakers Sneakers , Nike Black/Silver Lunar Racer Running SneakersModern technology Ted Baker Eliahn , lady Christian Louboutin Gold Cataclou Wedges Guarantee quality and quantityWOMEN Jeffrey Campbell Leopard Sneakers Platforms Order welcome , WOMEN Valentino Green Tea Sandals Online export business , woman Brian Atwood Pump Platforms Pleasant feeling , WOMENS Nike Blue Running Sneakers Exquisite workmanship ,
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.