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.Laura Bizzarri Ankle Boot - Women Laura Bizzarri Ankle Boots online on YOOX United Kingdom - 11486078VU , Converse All Star Sneakers - Women Converse All Star Sneakers online on YOOX United Kingdom - 11101679ABChiara Ferragni Sneakers - Women Chiara Ferragni Sneakers online on YOOX United Kingdom - 11339489GBNike Black/Pink Flex Run Sneakers SneakersLiz Claiborne Brown Kitten Heel Sandals , womens Miu Miu Wedges Most practical , CANDICE COOPER Rock Mosaico LOW-TOP TRAINERS FOR WOMEN , men/women Ivanka Trump Bernie Heels New product , man/woman Gabor Gabor 72.689 Boots Direct businessAdidas Love Moschino Trainers - neroAdidas Puma TSUGI JUN - Trainers - pomegranate/ribbon red/whiteAdidas Bianco ASYMMETRIC - Classic heels - black , men/women Havaianas Level Flip Flops Sandals Quality FirstDoucal's Loafers - Men Doucal's Loafers online on YOOX United Kingdom - 11502164QC , Lanvin Sneakers - Men Lanvin Sneakers online on YOOX United Kingdom - 11558287XATod's Loafers - Men Tod's Loafers online on YOOX United Kingdom - 11147616FUAdidas Tiger of Sweden SINENSIS - Trainers - bright whiteRoyal RepubliQ DORIC UNBOUND DERBY SHOE - Trainers - winePeluso Napoli Sneakers - Men Peluso Napoli Sneakers online on YOOX United Kingdom - 11508014OP , Alberto Moretti Loafers - Men Alberto Moretti Loafers online on YOOX United Kingdom - 11440316AT , Joshua*S Loafers - Women Joshua*S Loafers online on YOOX United Kingdom - 11470744LQ , J.Born Boots - Women J.Born Boots online on YOOX United Kingdom - 11498404WGA.Testoni Ankle Boot - Women A.Testoni Ankle Boots online on YOOX United Kingdom - 11548690XKBCBGMAXAZRIA Black Silver Rhinestones Bcbg Sandals , Charming design Dolce Vita Adalea , Balenciaga Cyan Blue "Pelle S.gomma" Perforated Leather High Top Sneakers , WOMENS Christian Louboutin Black 3080746 Platforms Low price , LADY Salvatore Ferragamo Yb29258 4r85 Sandals Price reduction , Ladies Jimmy Choo Gold India Sandals special purchaseladies Prada Green Crisscross Patent Sandals German Outlets
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.