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.Roberto Della Croce Boots - Men Roberto Della Croce Boots online on YOOX United Kingdom - 11530003OK , Eva L?pez Sandals - Women Eva L?pez Sandals online on YOOX United Kingdom - 11383297RV , HANNIBAL LAGUNA Gina-hannibal Laguna FASHION ANKLE BOOTS FOR WOMEN , LADY Ella Moss Black Bevan Sandals Orders are welcomeMISS Fly Flot Blue - Sandals German OutletsBULLBOXER 656581 Negro FASHION FOOTWEAR FOR WOMENPieces | Pieces Slider With Cutaway Inserts , Adidas Gabor Slip-ons - dark greyHUF SOTO - Trainers - black , man/woman Soft Style Pavi Sandals service , Adidas Tommy Hilfiger BUCKLE - Ankle boots - brown , mens/womens Dolce Vita Joss Boots high quality productmen's/women's Clarks Sashlin Sue Boots Selling new products , Grenson Boots - Men Grenson Boots online on YOOX United Kingdom - 11505698SN , man/woman Isola Melaney Sandals Highly praised and appreciated by the consumer audience , mens/womens Propet Four Points Waterproof Oxfords Pick up at the boutique , Savio Barbato Sneakers - Men Savio Barbato Sneakers online on YOOX United Kingdom - 11533846VLSergio Rossi Sandals - Women Sergio Rossi Sandals online on YOOX United Kingdom - 11518568GE , Valentino Garavani Court - Women Valentino Garavani Courts online on YOOX United Kingdom - 11444394VV , Rochas Ballet Flats - Women Rochas Ballet Flats online on YOOX United Kingdom - 11462297QDBianca Di Boots - Women Bianca Di Boots online on YOOX United Kingdom - 11572159NU , Miu Miu Silver Platform Sneakers Sneakersi37AtxPQ Salomon Ellipse Freeze CS WP , 22kkHvnt Levi's Shoes Union Mesh SPFashion versatile shoes Ryka Influence 2.5Schutz Jackye You're a step above the rest in the fashion-forward revitalization of these Schutz® Jackye sneaker , Ted Baker Beige Aarnah Light Pink Exotic Snake Leather Rose Gold Sandalswomen Madden Girl Brown Leopard Wedges Online export business , Calfskin 100mm Sneakers Guts Red 41 SneakersWOMENS Isaac Mizrahi Formal Shoes Reliable quality
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.