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.Racine Carrée Ankle Boot - Women Racine Carrée Ankle Boots online on YOOX United Kingdom - 11447338CL , Vans Ua Old Skool - Sneakers - Women Vans Sneakers online on YOOX United Kingdom - 11327503MAAndìa Fora Sneakers - Women Andìa Fora Sneakers online on YOOX United Kingdom - 11512434MFVans Ua Classic Slip-On Dx California Souvenir - Sneakers - Women Vans Sneakers online on YOOX United Kingdom - 11395372XL , Adidas Originals Nmd_R2 W - Sneakers - Women Adidas Originals Sneakers online on YOOX United Kingdom - 11307922SAWOMENS Stella McCartney Black 'elyse' Platforms Guarantee quality and quantityladies Naturalizer Black Comfortable Formal Shoes Fast deliveryEXE Vera-300 FASHION ANKLE BOOTS FOR WOMEN , White Mountaineering ADIDAS TERREX TWO - Trainers , mens/womens Stuart Weitzman Singlesky Heels Optimal price , Rieker HERREN - Slip-ons - schwarz , mens/womens Schutz Ingry Boots Many styles , Adidas WEEKEND MaxMara PERIGEO - Slip-ons - blu cinaKeys Boots - Men Keys Boots online on YOOX United Kingdom - 11549983VO , Adidas Selected Femme SLFAMBER ZIP - Ankle boots - decadent chocolate , Burberry Sneakers - Women Burberry Sneakers online on YOOX United Kingdom - 11570730MH , Pinko Court - Women Pinko Courts online on YOOX United Kingdom - 11547447STGeox Ankle Boot - Women Geox Ankle Boots online on YOOX United Kingdom - 11541914KQN° 21 Sneakers - Women N° 21 Sneakers online on YOOX United Kingdom - 11379966RS , Andìa Fora Sneakers - Men Andìa Fora Sneakers online on YOOX United Kingdom - 11380004OHMISS Jeffrey Campbell Wedges Attractive fashionPrice reduction Bed Stu Gogo LugLatest styles Scarpa SL Active , LifeStride Madison Make your Monday style pop in the modern and sleek Madison penny loafer from LifeStrideGolden Goose Deluxe Brand Blue Glitter Superstar SneakersClarks Brown Cork Wedge Leather Cut Outs Sandals , Hermès Brown Leopard Suede Oasis 42) 482342 Sandals , MISS Tory Burch Tan Verity Wedges Nice colorwoman Valentino Pink Velvet Bow Sandals Year-end sales , womens Shoemint Natural Nigel Platforms Qualified production
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.