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.Converse All Star Sneakers - Women Converse All Star Sneakers online on YOOX United Kingdom - 11583340JKLe Coq Sportif Sneakers - Men Le Coq Sportif Sneakers online on YOOX United Kingdom - 11336918LR , womens Brown Dacey Sandals selling price , Converse All Star Ct As Hi Canvas Print - Sneakers - Men Converse All Star Sneakers online on YOOX United Kingdom - 11336439VKRêve D'un Jour Ankle Boot - Women Rêve D'un Jour Ankle Boots online on YOOX United Kingdom - 11366083CLFitFlop Peach New W Box Women's Carmel Toe-post Suede Dress Sandals , WOMEN Sam Edelman Black Addison Sandals New design , WOMEN Multicolor Heels Formal Shoes Lush design , LADY Black Gladiator Sandals Wedges Customer firstPeter Kaiser HERDIS - Classic ankle boots , Men/Women Gabor Gabor 81.742 Heels Fine processingmen's/women's Yellow Box Zippie Sandals Popular recommendationflip*flop POOL STARLET - Pool slidersGabor WIDE FIT - High-top trainers , men's/women's Vince Camuto Arlanian Sandals sellSuperdry PRINTED - T-bar sandals Colour: darkest navy/optic hibiscusmens/womens G by GUESS Tunez Sandals Latest stylesmens/womens Calvin Klein Sloan Dress Oxfords Seasonal promotion , Adidas Be Natural Classic heels - navy , New Balance Sneakers - Men New Balance Sneakers online on YOOX United Kingdom - 11512458MS , Bally Sneakers - Women Bally Sneakers online on YOOX United Kingdom - 11461191JJNorma J.Baker Boots - Women Norma J.Baker Boots online on YOOX United Kingdom - 11447309DW , Roberto Festa Court - Women Roberto Festa Courts online on YOOX United Kingdom - 11545060XC , Bruno Premi Court - Women Bruno Premi Courts online on YOOX United Kingdom - 11464527AQJimmy Choo Sandals - Women Jimmy Choo Sandals online on YOOX United Kingdom - 11233501JK , Adidas Originals Sneakers - Men Adidas Originals Sneakers online on YOOX United Kingdom - 11299625VU , Wear resistant New Balance WCH896v2 TennisEvery item described is available Caterpillar Casual Cognate MidStylish and charming Dunham Royalton Boot Waterproof , ladies Woven Italian Leather Sneakers Most practical
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.