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.87 Vic Matiē Loafers - Women 87 Vic Matiē Loafers online on YOOX United Kingdom - 11259833UA , Il Calzolaio Ballet Flats - Women Il Calzolaio Ballet Flats online on YOOX United Kingdom - 11501295VK , Roma Retro Sports | Peacoat- Red-Puma White | PUMA Classics | PUMA United StatesManila Grace Denim Ballet Flats - Women Manila Grace Denim Ballet Flats online on YOOX United Kingdom - 11118649AE , Adidas Originals Bw Army - Sneakers - Men Adidas Originals Sneakers online on YOOX United Kingdom - 11542274RQ , womens Badgley Mischka Light Pink Sneakers Exquisite (medium) workmanshipSERGIO SERRANO 2237 ZAPATOS DE VESTIR PARA HOMBRECLARKS Sillian Tana-clarks BOTíN PLANO DE MUJER , mens/womens Steve Madden Stecy-M Heels Sufficient supplyZign Classic ankle boots - blackmen/women Rampage Hansel Boots Reliable performance , Stan smith trainers , pink, Adidas , man/woman Rockport Total Motion Emese Boots Wholesale trade , men's/women's Grazie Constant Clogs & Mules Outstanding functionmen/women ECCO Helsinki Slip On Loafers classic styleConverse STAR PLAYER - Trainers - teak/whiteEtnies BARGE - Skate shoes - black/greyKeys Sneakers - Men Keys Sneakers online on YOOX United Kingdom - 11550014EU , Bikkembergs Sneakers - Men Bikkembergs Sneakers online on YOOX United Kingdom - 11450586IRCinzia Araia Boots - Men Cinzia Araia Boots online on YOOX United Kingdom - 44976364DU , Ash Sandals - Women Ash Sandals online on YOOX United Kingdom - 11159370KP , Kanna Sandals - Women Kanna Sandals online on YOOX United Kingdom - 11570677GH , Avec Modération Sandals - Women Avec Modération Sandals online on YOOX United Kingdom - 11528241TVCantarelli Ballet Flats - Women Cantarelli Ballet Flats online on YOOX United Kingdom - 11516080BAPaul Andrew Sandals - Women Paul Andrew Sandals online on YOOX United Kingdom - 11552747EFGold Brothers Sneakers - Men Gold Brothers Sneakers online on YOOX United Kingdom - 11531913IGPuma Brown/Pink Alpine Trail Racer Sneakers , comfortability Chinese Laundry Marlowe SandalSaint Laurent White Yves Ysl Studded High Top Court Sneakers Sneakers , MISS Stuart Weitzman Brown Loafer Platforms Elegant and robust menu
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.