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.Manas Lea Foscati Sandals - Women Manas Lea Foscati Sandals online on YOOX United Kingdom - 11500936WE , Sergio Rossi Ankle Boot - Women Sergio Rossi Ankle Boots online on YOOX United Kingdom - 11320268HB , Bernie Mev. Sneakers - Women Bernie Mev. Sneakers online on YOOX United Kingdom - 11405175SKBurberry Light Pink Melange Check-quilted Leather High-top Children Girls Sneakers Sneakers SneakersWOMENS Bandolino White Sandals Famous storeRacine Carrée Ankle Boot - Women Racine Carrée Ankle Boots online on YOOX United Kingdom - 11459607OP , Ralph Lauren Collection Black New Arora Leather Buckle Sandals , mens/womens Sam Edelman Asher Boots low costmens/womens Nina Camille Heels good qualityman/woman Born Loren Sandals International choice , Dr. Martens Bolt Service 4-Eye Shoe , men/women Superga 2288 Crushvellutow Sneakers & Athletic Superga buy , Men/Women Nine West Jeanery Heels New varieties are launched , Men/Women Frye Perry Knot Thong Sandals professional design , Cafènoir Sneakers - Women Cafènoir Sneakers online on YOOX United Kingdom - 11478198TR , Colmar Sneakers - Men Colmar Sneakers online on YOOX United Kingdom - 11546585NGDsquared2 Sandals - Men Dsquared2 Sandals online on YOOX United Kingdom - 11353165GG , Lumberjack Boots - Men Lumberjack Boots online on YOOX United Kingdom - 11321148THASOS DESIGN | ASOS DESIGN Maidia Leather Loafers in leopard print , Gianfranco Lattanzi Loafers - Men Gianfranco Lattanzi Loafers online on YOOX United Kingdom - 11453957GH , Ebarrito Sneakers - Women Ebarrito Sneakers online on YOOX United Kingdom - 11518894RBMarella Ankle Boot - Women Marella Ankle Boots online on YOOX United Kingdom - 11537091TD , Panella Ankle Boot - Women Panella Ankle Boots online on YOOX United Kingdom - 11526667SFSuecomma Bonnie Sandals - Women Suecomma Bonnie Sandals online on YOOX United Kingdom - 11570635VL , Lola Cruz Sandals - Women Lola Cruz Sandals online on YOOX United Kingdom - 11344984WCShopping promotion Frye Paige Tall Riding , Beautiful and charming etnies Marana VulcManolo Blahnik Black Lime Green And Patent Leather Kitten Heels SandalsWOMENS Dior Silver Stiletto Formal Shoes Diverse new designPrada Pink 55mm Suede Kiltie Heels Sandals
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.