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.Anaid Kupuri Ankle Boot - Women Anaid Kupuri Ankle Boots online on YOOX United Kingdom - 11552531QA , FIARDI 1604 WEDGE-HEEL ESPADRILLES FOR WOMEN , BRUNATE 11455 ZAPATO PLANO PARA MUJERConverse Limited Edition All Star Hi Canvas Ltd - Sneakers - Women Converse Limited Edition Sneakers online on YOOX United Kingdom - 11095521UF , ladies Saint Laurent Midnight Blue Platforms Let our products go out into the world , PEPE JEANS Pgs90076 Maya 595 Navy SANDALIA PLANA DE MUJER , CALIFERS Sandalias Plataforma Mujer Piel Jan578i67-plateado FASHION SANDALS FOR WOMEN , FOXY UP F58-1223 Negro FASHION FOOTWEAR FOR WOMENMen/Women Vince Camuto Calivia Heels Excellent stretchingmen/women Natural Soul Brenda Sandals Famous store , Men/Women FitFlop Casa Loafers Loafers General product , Billi Bi Classic ankle boots Colour: tobacco , Jerusalem Sandals Mulholland Drive - Antika CollectionKenneth Cole New York Kam BalletJoma TOP FLEX TURF - Astro turf trainers Colour: blackmen/women Teva Delavina Low Suede Boots renewed on time , Men/Women Kenneth Cole New York Wilhelmina Flats Clearance salemens/womens Toni Pons Malmo-L Clogs & Mules Non-slipMargarita 943 leather wedge sandals , white, Pikolinos , Adidas Calvin Klein Jeans SHANNA - High heeled ankle boots - blackMerrell ALL OUT BLAZE 2 GTX - Walking shoes Colour: sodalite , Under Armour HOVR PHANTOM LOW - Neutral running shoes Colour: black/white , Elle Sandals - Women Elle Sandals online on YOOX United Kingdom - 11552686CU , Ebarrito Ankle Boot - Women Ebarrito Ankle Boots online on YOOX United Kingdom - 11548053KLLella Baldi Sandals - Women Lella Baldi Sandals online on YOOX United Kingdom - 11214952RD , KL4bRqJa Merrell Trail Glove 4 E-MeshBeautiful appearance Eric Michael TevaLiu •Jo Shoes Ankle Boot - Women Liu •Jo Shoes Ankle Boots online on YOOX United Kingdom - 11501227MO , Tory Burch Black/Red/ Field Flowers Delancy Sneaker Sneakers , WOMENS Giuseppe Zanotti Black/Gold Wedges Stylish and charming
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.