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.Susana Traca Ankle Boot - Women Susana Traca Ankle Boots online on YOOX United Kingdom - 11555111VN , Stephane Kélian Ankle Boot - Women Stephane Kélian Ankle Boots online on YOOX United Kingdom - 11484495HAIsabel Marant Étoile Sandals - Women Isabel Marant Étoile Sandals online on YOOX United Kingdom - 11331030TOLADY Chloé Olive Wedges Sufficient supplyMISS Arche Navy Blue Sandals durable , HUSH PUPPIES 560600-50 Fintan 8 Noir WEDGE-HEEL SANDALS FOR WOMEN , Women's Clarks Beige Leather 261318764035 Sandals official websitewomen Givenchy Leather Sandals Easy to handle , men/women Bogs Diamondback Boots Reasonable priceWallis SEASHELL - Platform sandals , mens/womens Softclox PENNY - Clogs Elegant shape , Ted Baker | Ted Baker Black Floral Sporty Sneakers , Adidas Saucony DXN VINTAGE - Trainers - white/teal , mens/womens s.Oliver Platform boots Clearance price , Men/Women Jack Rogers Madeline Sandals New in stockmen's/women's Chaco Mega Z Cloud Sandals Charming design , Adidas Marco Tozzi Ankle boots - rose , Prada Sneakers - Men Prada Sneakers online on YOOX United Kingdom - 11457477AR , Men/Women Superga 2750 Camfloralw Sneaker Sneakers & Athletic Superga Diversified new designmens/womens Pikolinos Capri W8F-0804 Heels Every item described is available , men/women Lugz Vet MM Sneakers & Athletic Lugz Strong heat and heat resistanceUnisa Boots - Women Unisa Boots online on YOOX United Kingdom - 11509135FACesare Paciotti Boots - Women Cesare Paciotti Boots online on YOOX United Kingdom - 11505188KM , Preventi Ankle Boot - Women Preventi Ankle Boots online on YOOX United Kingdom - 11329808GQ , Emanuela Passeri Court - Women Emanuela Passeri Courts online on YOOX United Kingdom - 11444682AEAjBmwLww La Sportiva Nepal Cube GTX , Amoy Foot Petals Cushionology Insole , Jimmy Choo Silver Pewter Leather Heels Strappy Sandalsladies Saint Laurent Bronze Tributes Sandals Preferred materialAquazzura Dark Orchid Amanda 75 39 Pumps
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.