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 - 11403959RMGIOSEPPO 43308 LOW-TOP TRAINERS FOR WOMEN , Converse CHUCK TAYLOR ALL STAR OX Pink , Steve Madden Envi Flat - Ballet Flats - Women Steve Madden Ballet Flats online on YOOX United Kingdom - 11547341DSBeverly Hills Polo Club Sneakers - Women Beverly Hills Polo Club Sneakers online on YOOX United Kingdom - 44899514BDTwin-Set Simona Barbieri Ankle Boot - Women Twin-Set Simona Barbieri Ankle Boots online on YOOX United Kingdom - 11290804MHwoman Prada Black Ankle Strap Sandals special discount price , MISS Ivanka Trump Ittabbi Formal Shoes Fair price , man/woman Merrell Jungle Moc Luxe Loafers Exquisite (middle) workmanshipmens/womens Mephisto Laser Sneakers & Athletic Mephisto auction , Star player core canvas trainers , white, Converse , Jessica Simpson JOSELLE - High heeled sandalsCorte Della Pelle VEDETTE - Ballet pumpsDsquared2 Sneakers - Women Dsquared2 Sneakers online on YOOX United Kingdom - 11299342QB , New Look Wide Fit WIDE FIT TIMMS - High heeled sandals Colour: oatmeal , Chuck taylor all star ox canvas low top trainers , charcoal, Converse , Nike Sportswear AIR VORTEX - Trainers - black/pure platinum/dark grey , Springa Sneakers - Women Springa Sneakers online on YOOX United Kingdom - 11451221XE , Pura López Sandals - Women Pura López Sandals online on YOOX United Kingdom - 11519983DDRuco Line Sneakers - Women Ruco Line Sneakers online on YOOX United Kingdom - 11477752WHTsd12 Ankle Boot - Women Tsd12 Ankle Boots online on YOOX United Kingdom - 11454028MH , Stella Mccartney Loafers - Women Stella Mccartney Loafers online on YOOX United Kingdom - 11164988RHQuality queen Chinese Laundry Springfield Mule , have fun Dockers Danby Boat ShoeEasy to use Corral Boots P5021Easy to use Aerosoles Over Drive , Kork-Ease Adelanto The Kork-Ease Adelento wedge sandal is a timeless addition to your closet!ara Nisha When nothing less than sophisticated will do, step into the classic Nisha pump , woman Sam Edelman Gray/Cream Espradille Wedges Free , Rag & Bone Black Kent Sneakers
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.