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.Chambre N°133 Ankle Boot - Women Chambre N°133 Ankle Boots online on YOOX United Kingdom - 11519245CL , Fabio Rusconi Ballet Flats - Women Fabio Rusconi Ballet Flats online on YOOX United Kingdom - 11532224DE , woman Tory Burch Jude Platforms Modern , Pellettieri Di Parma Boots - Men Pellettieri Di Parma Boots online on YOOX United Kingdom - 11264988CMSaint-Honoré Paris Souliers Loafers - Women Saint-Honoré Paris Souliers Loafers online on YOOX United Kingdom - 11168430ES , LADY Loeffler Randall Black Reina Sandals Reasonable priceLADY Prada White/Red Heart Print Sandals Primary quality , Etienne Aigner Red Leather Slip On Sandals , New Look MIPEY - Trainers Colour: white , Giorgio 1958 Classic ankle boots Colour: noce , Adidas Pharrell Williams Tennis Hu ShoesWide openwork ballerinas , black, CastalunaQuota ii trainers , black/white, GolaAdidas Levi's? WOODS - Trainers - regular black , Men/Women SeaVees 12/67 3 Eye Chukka Boots Pleasant appearance , men's/women's Rieker 608X3 Regina X3 Sandals Preferred material , Igi&Co Sneakers - Men Igi&Co Sneakers online on YOOX United Kingdom - 11464522PL , Manuel Barceló Sneakers - Men Manuel Barceló Sneakers online on YOOX United Kingdom - 11226012CUEffetti Personali Sneakers - Men Effetti Personali Sneakers online on YOOX United Kingdom - 11467915DU , adidas Performance ROCKADIA TRAIL M - Trail running shoes - legend ink/footwear white/trace blue , Chiara Ferragni Loafers - Women Chiara Ferragni Loafers online on YOOX United Kingdom - 11476201EEAnya Hindmarch Court - Women Anya Hindmarch Courts online on YOOX United Kingdom - 11431606EBPrada Brown Calzature Donna Platform Sandals , Manolo Blahnik Purple Collina Suede Pumps , LADY Céline Black/Tan Wedges to buy , Selling new products Eileen Fisher Perrywomens Alexander Wang Green By8909 Sneakers Used in durability , Merrell Black/Grey Pace Glove 3 Trail Running Sneakers , lady Tory Burch Olive Suede Wedges official website , WOMENS Ash Black Blade Sneakers Different products
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.