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.SOTOALTO Ego LOW-TOP TRAINERS FOR WOMEN , Nike Black Grey Peach 819147-001 Sneakers , Cj6TLLRL men's/women's LifeStride Randi Flats durability , Rick Owens X Adidas Sneakers - Women Rick Owens X Adidas Sneakers online on YOOX United Kingdom - 11559652TV , Prada Black Leather Sneaker with Removable Red Studs Maxi Fringe Sneakerswoman Jimmy Choo Python Wedges First group of customers , Tory Burch Black Fleming 100mm Leather Espadrille Sandals , lady Betsey Johnson Silver Evie Sandals Fast delivery , RALPH LAUREN Lakin WEDGE-HEEL SANDALS FOR WOMEN , Men/Women Think! 87254 Boots have funmen/women Tabitha Simmons Mendi Heels cheapest , men/women Donald J Pliner Lyle Loafers Popular tide shoesAdidas Marco Tozzi Cowboy/Biker boots - dark greyEtnies KINGPIN - Skate shoes - brown/black , Vans Sneakers - Men Vans Sneakers online on YOOX United Kingdom - 11186959CQ , Replay Boots - Men Replay Boots online on YOOX United Kingdom - 11494007BNmen's/women's Nine West Maqui Heels The first batch of customers' comprehensive specifications , Gianfranco Lattanzi Boots - Men Gianfranco Lattanzi Boots online on YOOX United Kingdom - 11512401DVPhilippe Model Sneakers - Men Philippe Model Sneakers online on YOOX United Kingdom - 11478485NPVince. Sandals - Women Vince. Sandals online on YOOX United Kingdom - 11515113GH , Geox Sneakers - Women Geox Sneakers online on YOOX United Kingdom - 11427347HF , Camper Court - Women Camper Courts online on YOOX United Kingdom - 11525639NIButtero® Court - Women Buttero® Courts online on YOOX United Kingdom - 11544539LT , Schutz Sandals - Women Schutz Sandals online on YOOX United Kingdom - 11472648BK , Grey Mer Sandals - Women Grey Mer Sandals online on YOOX United Kingdom - 44719344DNTod's Ankle Boot - Women Tod's Ankle Boots online on YOOX United Kingdom - 11570578LGa646sSCD HOGL 104336 SLIP-ON PARA MUJER , Excellent quality Sam Edelman Rosalielady J.Crew Espradille Wedges Strong heat and wear resistanceLadies Hogan Orange/Beige/Black Slide Sandals Suitable for color
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.