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.Angelo Bervicato Ankle Boot - Women Angelo Bervicato Ankle Boots online on YOOX United Kingdom - 11547259FNColors Of California Sneakers - Women Colors Of California Sneakers online on YOOX United Kingdom - 11107801RMAlexander Smith Sneakers - Women Alexander Smith Sneakers online on YOOX United Kingdom - 11504036PV , Tommy Jeans Material Mix Wedge Sandal - Sandals - Women Tommy Jeans Sandals online on YOOX United Kingdom - 11471183XHDiadora Heritage Exodus W Glitter - Sneakers - Women Diadora Heritage Sneakers online on YOOX United Kingdom - 44905939HGDolce & Gabbana Ankle Boot - Women Dolce & Gabbana Ankle Boots online on YOOX United Kingdom - 11260956AJ , Rockport Cobb Hill Collection Cobb Hill Hattie EnvelopeNike Rose Gold and Black Metcon Sneakersmen's/women's Sam Edelman Blake Boots Fine processingMen/Women Old Gringo Feita Boots Elegant shape , Lumberjack PEAKS - High-top trainers Colour: blackMen/Women Matisse Kellen Heels Lush designMen/Women CAFèNOIR Platform boots Colour: nero Easy life , Adidas Tamaris High heeled ankle boots - navy , men's/women's Soft Style Pran Loafers Year-end special promotionsmen's/women's Diadora Game L Low Mirror Sneakers & Athletic Diadora Skilled manufacturingThe North Face BASECMP SWITCHBACK - Walking sandals - off , man/woman Steve Madden Ennore Sneakers & Athletic Steve Madden Fine wildDel Toro Boots - Men Del Toro Boots online on YOOX United Kingdom - 11362255QF , Guess Espadrilles - Women Guess Espadrilles online on YOOX United Kingdom - 11335035DU , Zinda Boots - Women Zinda Boots online on YOOX United Kingdom - 11338535LH , Dolfie Loafers - Women Dolfie Loafers online on YOOX United Kingdom - 11527942OHRodo Sandals - Women Rodo Sandals online on YOOX United Kingdom - 11527198QMChiara Ferragni Sneakers - Women Chiara Ferragni Sneakers online on YOOX United Kingdom - 11212240AQ , Rich on-time delivery Reef Escape Lux NatureElegant appearance Deer Stags Bowen Loafer , Perfect processing Finn Comfort Hollister , International choice etnies Dory SC , ALDO Phelot Perfect your distinguished look with the ALDO Phelot loafer , WOMEN Prada Orange Sneakers Sneakers Online export business ,
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.