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.Kat Maconie Kay - Sandals - Women Kat Maconie Sandals online on YOOX United Kingdom - 11444554EN , NIKE Aq1779-100 LOW-TOP TRAINERS FOR WOMEN , dI6QYhzV men's/women's Naturalizer Wynnie Boots cheaper , Converse CHUCK TAYLOR ALL STAR II - HI Black / White , women Tory Burch Tan Low Wedges Popular tide shoeswomens Blue "Ynez" Vintage By Wedges Nice and charming , LINCE 55202 Negro SANDALIA PLANA DE MUJER , BCBGMAXAZRIA White and Black Jovian Slingback SandalsZadig & Voltaire NEO KEITH - Trainers , mens/womens Bella-Vita Lilo Heels Comfortable and naturalmen's/women's Aquatalia Nellie Boots Year-end special promotions , Asics Tiger GEL-LYTE - High-top trainers - forrest/moss , Marsèll Boots - Men Marsèll Boots online on YOOX United Kingdom - 11518226HX , House of Hounds | House Of Hounds Blain Bar Loafers In Black , Stellaberg Boots - Women Stellaberg Boots online on YOOX United Kingdom - 11233605DU , Vicini Court - Women Vicini Courts online on YOOX United Kingdom - 11510426QPInk Boots - Women Ink Boots online on YOOX United Kingdom - 11547635EU , Sebastian Espadrilles - Women Sebastian Espadrilles online on YOOX United Kingdom - 11562445MPGedebe Sandals - Women Gedebe Sandals online on YOOX United Kingdom - 11328608UU , Festa Milano Court - Women Festa Milano Courts online on YOOX United Kingdom - 11456490FERag & Bone White Oxford Sneakersladies Christian Louboutin Spike Sneakers ComfortBmsURuiU NIKE 812655-nike TRAINERS FOR WOMENNot so expensive ED Ellen DeGeneres Afuera , Excellent quality Salomon S/Lab Sense 7 , Midnight Blue Men's Scully High Top Fashion Sneaker Sneakerslady Valentino White Espradilles Wedges Easy to clean surface , WOMEN Giuseppe Zanotti Cream/Alligator Kameron Sneakers Perfect workmanship , Ladies Valentino White Rockstud Heel Pumps Hot sale , Ladies Fendi Black/Pink/Red 8k3968 Platforms Order welcome
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.