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.Massimo Lonardo Ankle Boot - Women Massimo Lonardo Ankle Boots online on YOOX United Kingdom - 11471951IO , Minnetonka Ankle Boot - Women Minnetonka Ankle Boots online on YOOX United Kingdom - 11342391VU , APLAUSO 4207 ZAPATO CONFORT DE MUJERlady Fendi Multicolor Sandals Elegant style , womens Tod's Brown Suede Sandals trendyWOMEN Burberry Taupe Sandals New design , Weejuns® By G.H. Bass & Co Loafers - Men Weejuns® By G.H. Bass & Co Loafers online on YOOX United Kingdom - 11585915KC , NIKE 685167 Downshifter 6 Gs 502 TRAINERS FOR WOMENladies Madden Girl Black Glitter Wedges Suitable for color , Roger Vivier Pink New 38 Sold Out Pumps , Women's Giuseppe Zanotti Cream Platforms Suitable for color , Nike Burgundy Sports Performance Women's Golf Sneakersmen/women Kamik Boston 2 Boots New productASICS GEL-EXCITE 4 - Neutral running shoes - black/carbon , men/women Sam Edelman Hastings Heels Don't worry when shoppingNew Look RICHES - High heeled sandals Colour: blackGuess CHARLIE - Trainers - dark greyONLY SHOES ONLBOBBY METALLIC - Ankle bootsWeg Loafers - Men Weg Loafers online on YOOX United Kingdom - 11537434GC , man/woman Divine Factory Sandals Colour: camel As of the latest model , Mizuno MORELIA II MD - Moulded stud football boots - black , men/women Anne Klein Salome Heels The color is very eye-catching , Bruno Premi Sandals - Women Bruno Premi Sandals online on YOOX United Kingdom - 11463760EBAnya Hindmarch Sneakers - Women Anya Hindmarch Sneakers online on YOOX United Kingdom - 11542726SMDaniele Alessandrini Sneakers - Men Daniele Alessandrini Sneakers online on YOOX United Kingdom - 11499102XM , Calvin Klein Black Logo Style Sandals , womens Black N Pink Sneakers brand , Attractive fashion Finn Comfort Gomera-Slady Prada Silver and Black Sandals Highly appreciated and widely trusted in and outChristian Louboutin Louis Junior Woman Flat Sneaker Denim Blue White Spike Sneakers ,
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.