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.Giancarlo Paoli Ankle Boot - Women Giancarlo Paoli Ankle Boots online on YOOX United Kingdom - 11477220CG , Ancient Greek Sandals Sandals - Women Ancient Greek Sandals Sandals online on YOOX United Kingdom - 11559910BHDaniele Alessandrini Homme Sneakers - Men Daniele Alessandrini Homme Sneakers online on YOOX United Kingdom - 11531840RNCesare Paciotti Sandals - Women Cesare Paciotti Sandals online on YOOX United Kingdom - 11505072IKColumbia Super Bonehead Vent Leather PFG2 , Pour La Victoire Court - Women Pour La Victoire Courts online on YOOX United Kingdom - 11479303DSNike New Air Max Jewell Lx SneakersWOMEN Frye Black Hannah Wedges Preferred material , Asics Tiger GEL MOVIMENTUM - TrainersH by Hudson AMPTHILL - Trainers , men's/women's Kamik Baltimore Boots International choice , Esprit POLLY SLIDE - Clogs , Rockport Dressports 2+ Light Slip On , Vans | Vans Old Skool sneakers in black vd3hy28Nike Sneakers - Men Nike Sneakers online on YOOX United Kingdom - 11116143IE , mens/womens Klogs Footwear Madrid Clogs & Mules Adequate supply and timely deliveryman/woman Columbia Mountain Masochist IV Sneakers & Athletic Columbia Known for its good qualityEbarrito Sneakers - Women Ebarrito Sneakers online on YOOX United Kingdom - 11521140JBNora Ankle Boot - Women Nora Ankle Boots online on YOOX United Kingdom - 11484036HH , Marsèll Ankle Boot - Women Marsèll Ankle Boots online on YOOX United Kingdom - 11460107SS , Philipp Plein Court - Women Philipp Plein Courts online on YOOX United Kingdom - 11482432KT , Manolo Blahnik Black Patent Leather Sandalswoman OTBT Tan Wedges retail priceISaD1gUJ Massimo Matteo Rope Bit DriverStrong heat and heat resistance New Balance Classics MZ501good quality Yellow Box Josiahadidas Prophere Keep moving and grooving with the adidas ProphereChristian Louboutin New Bronze Kitten Heel Geometric Sandals , WOMENS Manolo Blahnik Deep Pink Sandals Customer first , womens Maison Margiela S37ws237 Sneakers Excellent features
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.