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.Roberto Festa Ankle Boot - Women Roberto Festa Ankle Boots online on YOOX United Kingdom - 11507739FG , Le Silla Ballet Flats - Women Le Silla Ballet Flats online on YOOX United Kingdom - 11395333FLGiampaolo Viozzi Sandals - Women Giampaolo Viozzi Sandals online on YOOX United Kingdom - 11495602WF , John Deere WCT Waterproof 10" Pull-On , Women's Beige 2345 Sneakers Qualified productionlady Love Moschino Red/Gold Sandals New , Jessica Simpson Brown with Red and Orange Beading. - Orleans (Little Kid) SandalsMISS Nine West Brown Leather Wedges Different styles and stylesMISS Yellow Box Zebra Wedges Beautiful art , Lost Ink HATTIE RUFFLE - Mules Colour: black , mens/womens ALDO Evia Boots Various latest designsBirkenstock LONDON - Mules - black , Matisse Coconuts by Matisse - EssenceAdidas Office APPLAUSE - Ankle boots - greyMen/Women Dr. Scholl's Frankie Mesh Flats Complete specificationVans Sneakers - Men Vans Sneakers online on YOOX United Kingdom - 11574173SSDiemme Boots - Men Diemme Boots online on YOOX United Kingdom - 11531443XKMontefiori Boots - Men Montefiori Boots online on YOOX United Kingdom - 11488421RR , Superga® Boots - Men Superga® Boots online on YOOX United Kingdom - 11456099WVmens/womens Clarks Clarene Surf Boots We have won praise from our customers.Adidas Dr. Martens 2976 CHELSEA - Classic ankle boots - black , man/woman New Balance Leadville Sneakers & Athletic New Balance CharacteristicsLerre Court - Women Lerre Courts online on YOOX United Kingdom - 11484766KPLacoste Sneakers - Women Lacoste Sneakers online on YOOX United Kingdom - 11275699CP , Keys Court - Women Keys Courts online on YOOX United Kingdom - 11553079XMWear resistant Tommy Hilfiger Bowman 10Online Rockport TruFlex Mesh Tie , a wide variety of goods Kamik SnoValley 2 , Sbicca Sound Part of the Sbicca™ Vintage Collection. , ladies Madewell Tan/Silver Strappy Mid-heel Sandals The highest quality material
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.