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.Loretta Pettinari Ankle Boot - Women Loretta Pettinari Ankle Boots online on YOOX United Kingdom - 11472952KDLiu ?Jo Shoes Sneakers - Women Liu ?Jo Shoes Sneakers online on YOOX United Kingdom - 11370113HK , Roberto Della Croce Boots - Men Roberto Della Croce Boots online on YOOX United Kingdom - 11530121JA , Coral Blue Espadrilles - Women Coral Blue Espadrilles online on YOOX United Kingdom - 11385610NFRodolphe Menudier Court - Women Rodolphe Menudier Courts online on YOOX United Kingdom - 11095447TTSKECHERS Ske 54152ccor SLIP-ON PARA MUJERwomen Gold Leather Sandals First quality , Liu •Jo Man Loafers - Men Liu •Jo Man Loafers online on YOOX United Kingdom - 11534834AL , ALMA EN PENA 079-alma En Pena FASHION ANKLE BOOTS FOR WOMENWOMEN Saint Laurent Black Paris Pumps special offer , men/women Adidas Superstar Slip-On Shoes Schuhe Non-slip , man/woman Eric Michael Barcelona Boots Elegant styleMen/Women Schutz Nadira Heels Win highly appreciatedmen/women Eric Michael Val Boots Current shape , mens/womens Sergio Rossi Dafne Heels Bargainman/woman SoftWalk Urban Boots Excellent performanceAdidas Zign High heeled ankle boots - cognac , Geox Loafers - Men Geox Loafers online on YOOX United Kingdom - 11183942OF , Premiata Boots - Men Premiata Boots online on YOOX United Kingdom - 11529629OIMen/Women Cole Haan Zerogrand Stitchlite Ballet Sneakers & Athletic Cole Haan comfortabilityASICS GEL-KAYANO 25 OBI - Stabilty running shoes - black/carbonMen/Women Reef Machado Day Prints Sandals Various types and stylesNero Giardini Sneakers - Men Nero Giardini Sneakers online on YOOX United Kingdom - 11543928SM , men/women Calvin Klein Jameelah Sneakers & Athletic Calvin Klein Strong heat and wear resistance , Ras Loafers - Women Ras Loafers online on YOOX United Kingdom - 11351857SOValentino Garavani Sneakers - Women Valentino Garavani Sneakers online on YOOX United Kingdom - 11146679CPEconomical and practical Camper Alright - K200607 , Fine workmanship Old West Boots Weekender , a wide range of products Vasque Mantra 2.0Giuseppe Zanotti Black * Double-zip Sneakers Multicolored Jewels Sneakers
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.