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.Halston Heritage Ankle Boot - Women Halston Heritage Ankle Boots online on YOOX United Kingdom - 11203369HK , Laurence Dacade Ankle Boot - Women Laurence Dacade Ankle Boots online on YOOX United Kingdom - 11486593TQ , Isabel Marant Ankle Boot - Women Isabel Marant Ankle Boots online on YOOX United Kingdom - 11202311WBNOHOLITA S032300005btp BOTíN PLANO DE MUJER , WOMEN Prada Black Leather Heels Sandals Modern and elegant fashionALMA EN PENA S029200059mpi FASHION ANKLE BOOTS FOR WOMEN , ladies Salvatore Ferragamo Red Unknown Pumps Various current designs , ladies Badgley Mischka Brown Formal Shoes Low pricewomens Prada Nude/Tan Wedges Elegant and robust menu , Onitsuka Tiger by Asics GEL-Lyte V Sanze Knit , men's/women's Franco Sarto Sanora Flats Fine artMen/Women Blondo Varta Waterproof Bootie Boots uniquemen/women Chinese Laundry Stassi Heels Lightweight shoesBilli Bi Cowboy/Biker boots Colour: black tequila , Clarks CLARKDALE ARLO - Ankle boots , Men/Women Caparros Nixie Heels Good quality , men's/women's Naturalizer Valerie Heels stable quality , Adidas KIOMI Sandals - cognac , Marco Tozzi Slip-ons Colour: rose metallicMunich Sneakers - Men Munich Sneakers online on YOOX United Kingdom - 11454770XF , Premiata Boots - Men Premiata Boots online on YOOX United Kingdom - 11529508ATGeox Sneakers - Men Geox Sneakers online on YOOX United Kingdom - 11564758DHGreen George Loafers - Men Green George Loafers online on YOOX United Kingdom - 11162334VLJucca Sandals - Women Jucca Sandals online on YOOX United Kingdom - 11004827HQGiancarlo Paoli Court - Women Giancarlo Paoli Courts online on YOOX United Kingdom - 11546416UTDaniele Tortora Loafers - Women Daniele Tortora Loafers online on YOOX United Kingdom - 11494751UH , high quality product Lilly Pulitzer Pool Flip-FlopStrong heat and wear resistance Propet Travelfit Strap , Liu •Jo Shoes Court - Women Liu •Jo Shoes Courts online on YOOX United Kingdom - 11052542NW , women Valentino Copper Mirror Me Pumps Modern mode
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.