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.Nero Giardini Ankle Boot - Women Nero Giardini Ankle Boots online on YOOX United Kingdom - 11488728KIValentino Garavani Ankle Boot - Women Valentino Garavani Ankle Boots online on YOOX United Kingdom - 11477341WDJohn Varvatos Collection Eldridge Harness BootCWh2m2p3 men/women SoftWalk Heights Heels Simple , Twin-Set Simona Barbieri Court - Women Twin-Set Simona Barbieri Courts online on YOOX United Kingdom - 11037800TEMISS Jeffrey Campbell Blue Ibiza Wedges Consumers first , Ladies Skechers Black Memory Foam Sandals Reliable quality , WOMENS Miu Miu Black Patent Wedges Characteristic , womens Zara Gold Flat Sandals clearance saleman/woman Taryn Rose Faye Loafers have fun , men's/women's UNIONBAY Magical Sandals Most practicalman/woman Blowfish Drum Sandals Breathable shoesKristin Cavallari Leigh-2 Two Piece Sandal , Brett & Sons Smart slip-ons , HUF | HUF Hupper 2 lo leather sneakers in white , Adidas El Naturalista ANGKOR - Ankle boots - woodmen's/women's Massimo Dutti Moccasins Colour: black have funNike Sportswear BENASSI DUO ULTRA SLIDE - Mulesmen's/women's Calvin Klein Nashra Heels The latest technology , Felmini CREPONA - Ankle boots Colour: james blackCasadei Court - Women Casadei Courts online on YOOX United Kingdom - 11074985KS , Hogan Sneakers - Men Hogan Sneakers online on YOOX United Kingdom - 11472455XELotto COURT LOGO 8 SI - Indoor tennis shoes - white/aviatorGreen George Boots - Men Green George Boots online on YOOX United Kingdom - 11191897IH , Mally Sandals - Women Mally Sandals online on YOOX United Kingdom - 11376233BKMoschino Boots - Women Moschino Boots online on YOOX United Kingdom - 11451148MXTsd12 Sneakers - Women Tsd12 Sneakers online on YOOX United Kingdom - 11453961NJNike Sneakers - Women Nike Sneakers online on YOOX United Kingdom - 11493335KNBlundstone BL1443 Embrace some bold style with the vibrant color of the Blundstone BL1443 boot.Dansko Black Versatile Slingback Euro 39 (8.5 To 9) 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.