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.Dolce & Gabbana Boots - Women Dolce & Gabbana Boots online on YOOX United Kingdom - 11488405KL , Hannibal Laguna Court - Women Hannibal Laguna Courts online on YOOX United Kingdom - 11541569WLMISS Altuzarra Nude Wedges packaging diversity , FUTURE 2.3 NETFIT TT | Col Shift-Green-White-Black | PUMA Indoor | PUMA United StatesTomas Maier Ballet Flats - Women Tomas Maier Ballet Flats online on YOOX United Kingdom - 11529556QH , CALIFERS Botines Mujer Piel Biarritz Ja421y87-marron FASHION FOOTWEAR FOR WOMEN , women Rachel Roy Signature Black Platforms Suitable for color , woman Stella McCartney Woven Sneakers Sneakers Selected materialsmen/women Frye Cece Jodhpur Boots German Outletsmens/womens Bacco Bucci Bale Boots Beautiful design , Adidas Minelli Ankle boots - rubisMen/Women Geox WTHELMA6 Heels Innovative design , Men/Women Dansko Deandra Heels Personalization trendmen/women Dolce & Gabbana Studded Oxford Oxfords High security , Adidas Camper HOOPS - Trainers - medium brown , men's/women's Bianco Wedge sandals Fine processingNetley ella leather ankle boots , black, ClarksHogan Sneakers - Women Hogan Sneakers online on YOOX United Kingdom - 11542758OG , Giorgio Armani Boots - Men Giorgio Armani Boots online on YOOX United Kingdom - 11451536TQ , Gentryportofino Sneakers - Women Gentryportofino Sneakers online on YOOX United Kingdom - 11515801TVGuess Sneakers - Women Guess Sneakers online on YOOX United Kingdom - 11491024WD , Prada Sandals - Women Prada Sandals online on YOOX United Kingdom - 11150680XOCafènoir Ankle Boot - Women Cafènoir Ankle Boots online on YOOX United Kingdom - 44955454BKFolk Ankle Boot - Women Folk Ankle Boots online on YOOX United Kingdom - 11500072GM , Avril Gau Sandals - Women Avril Gau Sandals online on YOOX United Kingdom - 11430403KTModerate cost Stuart Weitzman MyguyfvwPfdoy Ladies Brown/Linen Platforms settlement Price , Ladies FitFlop Eggshell Leather Sneakers Sneakers Primary quality , womens Tony Bianco Nude Kiki Sandals Different productsLadies Badgley Mischka Black Formal Shoes Comfort ,
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.