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.Emanuela Passeri Ballet Flats - Women Emanuela Passeri Ballet Flats online on YOOX United Kingdom - 11444647AM , Diadora M. Winner RB LT TF , WOMENS Jeffrey Campbell Cheetah Wedges Germany , Moa Master Of Arts Sneakers - Women Moa Master Of Arts Sneakers online on YOOX United Kingdom - 11501460FJ , Women's Steve Madden Bone Wedges Guarantee quality and quantity , LADY Jeffrey Campbell Black Foxy Platforms Excellent performance , Under Armour UA SpeedForm? Gemini 3 Vent , WOMEN Manolo Blahnik Brown Kayapoti Sandals Affordable , Men/Women Bandolino Galtelli Heels Very good classificationflip*flop HOMESTAY WORDS - Slippers , Clarks TRI CURVE - Slip-ons , men/women SKECHERS Reggae Fest Squirt Sandals Used in durabilitymens/womens Rockport Langdon Slip-On Loafers The highest quality material , Primabase Sneakers - Men Primabase Sneakers online on YOOX United Kingdom - 11332663ASLeather wedge brogues with buckle detail , black, La Redoute CollectionsDune London WIDE FIT WIDE FIT ADDENA - Classic heelsmens/womens Tommy Bahama Costa Venetian Sneakers & Athletic Tommy Bahama In short supplyHogan Rebel Court - Women Hogan Rebel Courts online on YOOX United Kingdom - 11045046DMLove Moschino Sandals - Women Love Moschino Sandals online on YOOX United Kingdom - 11326333RKLemaré Ankle Boot - Women Lemaré Ankle Boots online on YOOX United Kingdom - 11560692QOfashionable PUMA Golf Suede G , stable quality Tamaris Locust 1-1-28634-20Modern mode Sam Edelman Margie , Rochas RO31132 Entice those around you with your pure beauty wearing these Rochas booties , EVOLV Supra Feel confident rocking climbing on the wall and the mountain with the lightweight durability and superior grip of the EVOLV Supra all-around climbing shoe. , Black White Red One Sole-original Changeable 4 Diff Looks W/1 (Nib) Sandals , women Ralph Lauren White Ralla Wedges Nice and charming , WOMEN Jessica Simpson Magenta Combo Platforms Very good qualityLADY Me Too Blac Medley4 Wedges Hot saleladies Burberry . Platforms High quality and economy
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.