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.KANNA 4043 WEDGE-HEEL SANDALS FOR WOMEN , Vans OLD SKOOL Black / White , Janet & Janet Ankle Boot - Women Janet & Janet Ankle Boots online on YOOX United Kingdom - 11504663PNWRANGLER Wl171664 Kelly Rojo WEDGE-HEEL SANDALS FOR WOMENwoman ALDO Black Caldari Formal Shoes Modern technology , lady Fabio Wine Fashion Sandals Stylish and charming , mens/womens Lauren Lorraine Bari Flats flagship store , men/women Steven Johannah Bootie Boots Official websiteman/woman Matisse Columbia Heels Personalization trend , mens/womens Trask Miriam Heels professional design , Gel-lyte leather trainers , beige, Asicsman/woman Frye Dara Chelsea Boots Carefully selected materials , Adidas Pier One Classic heels - berry , Lo.White Loafers - Men Lo.White Loafers online on YOOX United Kingdom - 11530356DVCult Sneakers - Men Cult Sneakers online on YOOX United Kingdom - 11088371JSLanvin Sneakers - Men Lanvin Sneakers online on YOOX United Kingdom - 11280806KK , Adidas Reebok Classic WORKOUT L OW - Trainers - white/grey , Cult Loafers - Women Cult Loafers online on YOOX United Kingdom - 11126241EHSara Sandals - Women Sara Sandals online on YOOX United Kingdom - 11467679PMDucanero Ankle Boot - Women Ducanero Ankle Boots online on YOOX United Kingdom - 11550957DF , Chiarini Bologna Sneakers - Women Chiarini Bologna Sneakers online on YOOX United Kingdom - 11174808AJAniye By Sneakers - Women Aniye By Sneakers online on YOOX United Kingdom - 11521192MHCeline Ankle Boot - Women Celine Ankle Boots online on YOOX United Kingdom - 11499785TJ , Marc Jacobs Sneakers - Women Marc Jacobs Sneakers online on YOOX United Kingdom - 11283763LNNike Multicolor Free Transform Flyknit SneakersvxS2XtzI SKECHERS Goldie - Rock ShowChristian Louboutin Black Catchetta Leather Gladiator Strappy Caged Toe Ring Flat 35 Sandals , New Balance White/Red 300 White/Red Suede Trainers Sneakers , ladies OKA b. Silver Wedges Exquisite workmanship , WOMENS Prada Black Patent Sandals Pleasant feeling ,
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.