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.Jeffrey Campbell Ankle Boot - Women Jeffrey Campbell Ankle Boots online on YOOX United Kingdom - 11460972CS , Jil Sander Navy Sandals - Women Jil Sander Navy Sandals online on YOOX United Kingdom - 11100479PFCrime London Sneakers - Women Crime London Sneakers online on YOOX United Kingdom - 11530059SHwomens Tod's Brown Leather Sandals diversityColors of California METALLIC MULE GoldTua By Braccialini Ankle Boot - Women Tua By Braccialini Ankle Boots online on YOOX United Kingdom - 11266813CV , Nike Free Rn 2018 - Sneakers - Women Nike Sneakers online on YOOX United Kingdom - 11504730PT , ( Verba ) Loafers - Women ( Verba ) Loafers online on YOOX United Kingdom - 11502687WAladies Céline Black Kidskin Woven Pumps King of the quantity , WOMENS L'Autre Chose White Heel Platforms Crazy Price, Birmingham , Valentino Black Women's Rockstud Slide Pvc SandalsMen/Women Jessica Simpson Mareya Heels Bargain , mens/womens Clergerie Pintom Oxfords Reliable quality , Adidas JETTE Trainers - black , The North Face ThermoBall Button UpKenneth Cole New York COLVIN - Trainers - whitemen/women Adidas Barricade 2018 Shoes Schuhe Diverse new designOffice | Office Azalea White Leather Ankle Boots , Rocco P. Loafers - Men Rocco P. Loafers online on YOOX United Kingdom - 11518237QM , Giuseppe Zanotti Sandals - Men Giuseppe Zanotti Sandals online on YOOX United Kingdom - 11394814WAman/woman adidas Stella McCartney Barricade 2015 Sneakers & Athletic adidas First batch of customers , Robert Clergerie Sneakers - Women Robert Clergerie Sneakers online on YOOX United Kingdom - 11503304VH , Manuel Barceló Espadrilles - Women Manuel Barceló Espadrilles online on YOOX United Kingdom - 11332050SK , Emporio Armani Espadrilles - Women Emporio Armani Espadrilles online on YOOX United Kingdom - 11423532CU , Full range of specifications Avenger A7625 Soft ToeComfortable and natural Pajar CANADA Trooper , Durable service Stacy Adams GustoOff-White™ Ankle Boot - Women Off-White™ Ankle Boots online on YOOX United Kingdom - 11475465XS , LADY Frye Brown Carson Wedges Ideal gift for all occasionsWOMEN Manolo Blahnik Brown Leather Sandals diversity
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.