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.Roberto Del Carlo Sandals - Women Roberto Del Carlo Sandals online on YOOX United Kingdom - 11179155PR , Silvia Rossini Ankle Boot - Women Silvia Rossini Ankle Boots online on YOOX United Kingdom - 11518225RGColiac Martina Grasselli Sandals - Women Coliac Martina Grasselli Sandals online on YOOX United Kingdom - 11340629HGSteve Madden Sandals - Women Steve Madden Sandals online on YOOX United Kingdom - 11339634EF , PUMA S046436641bpi LOW-TOP TRAINERS FOR WOMEN , Hummel VENICE RETRO Gre / Red / WhiteKenzo Baskets Sans La Main - Sneakers - Men Kenzo Sneakers online on YOOX United Kingdom - 11545175FP , men's/women's Born Cuatros Boots Online export storemen/women Dolce Vita Celita Sandals Durable service , SJP by Sarah Jessica Parker Bliss 70 , mens/womens Loeffler Randall Callie Oxfords cheapest , men's/women's GUESS Delamar Boots Special purchasemen's/women's Van Heusen Anthony Oxfords delicate , GANT MAX - Classic ankle boots - dark brown , L37 DRAGON LADY - High heeled ankle boots Colour: black/white , Adidas MIISTA LORELLE - Ankle boots - toasted , Adidas Patrizia Pepe Classic ankle boots - nero , man/woman CL By Laundry Gwynne Flats Year-end sale , Jim Rickey CLOUD RUNNER MEN - Trainers - dark grey , men's/women's Adidas Men's Superstar Foundation Shoes Schuhe Popular tide shoesmens/womens Bullboxer Heeled mules Various types and stylesmen/women La Canadienne Karley Boots As of the latest modelCesare P. Boots - Men Cesare P. Boots online on YOOX United Kingdom - 11551189BD , Gina Sandals - Women Gina Sandals online on YOOX United Kingdom - 11407900WHStuart Weitzman Sandals - Women Stuart Weitzman Sandals online on YOOX United Kingdom - 11509345VIlady Black Razor Sandals Nice color , Excellent stretching ASICS Netburner Ballistic FF , Callaway Highland Tee off with Callaway and the Highland Golf Shoe.Christian Louboutin Navy Vieira Spikes Flat Denim Sneaker 40 SneakersLADY Céline Vermilion Espadrille Leather Wedges Good market
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.