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.Stuart Weitzman Ankle Boot - Women Stuart Weitzman Ankle Boots online on YOOX United Kingdom - 11266860FW , Betti Oliva Ballet Flats - Women Betti Oliva Ballet Flats online on YOOX United Kingdom - 44969992TV , Petrucha Open-Toe Mules - Women Petrucha Open-Toe Mules online on YOOX United Kingdom - 11534443XP , Burberry Brit Traditional Style Sneakers Sneakers , woman Lanvin Black Sandals Wedges auctionLadies Burgundy "Beat" Leather Sneakers Practical and economicalAPLAUSO 2531 FASHION ANKLE BOOTS FOR WOMENlady Fendi Grey Sneakers Suitable for color , Oxitaly STEGIA - Classic heels Colour: assiaSKECHERS Performance On The Go - Tide , men/women Splendid Janet Heels Human borderDorothy Perkins SADIE - Sandals , man/woman rag & bone Keaton Slide Sandals Elegant styleStradivarius | Stradivarius leopard print sneaker with zip detailing , Adidas Mint Velvet FLORRIE - Espadrilles - navy , men's/women's PARC City Boot Pier Loafers Quality First , Brimarts Boots - Men Brimarts Boots online on YOOX United Kingdom - 11296760QFNike Performance METCON 4 - Sports shoes - olive/white/medium brown/neutral olive/desert sandZadig & Voltaire EMPRESS CLOUS - Classic ankle boots Colour: noir , Leather Crown Sneakers - Men Leather Crown Sneakers online on YOOX United Kingdom - 11498728BS , L'amour Boots - Women L'amour Boots online on YOOX United Kingdom - 11493375XX , Puma Sneakers - Women Puma Sneakers online on YOOX United Kingdom - 11333537PLRuco Line Sandals - Women Ruco Line Sandals online on YOOX United Kingdom - 11334959IL , Le Silla Sneakers - Women Le Silla Sneakers online on YOOX United Kingdom - 11523315ABCross Walk Sandals - Women Cross Walk Sandals online on YOOX United Kingdom - 11456357LUWomen's Dior Gold Platforms New product , stable quality PUMA Safety Aerial LowValentino Blue Rockstud Nude Leather Triple Strap Kitten Heel 39 Pumps , WOMENS Chaco Brown Zong Ecotread Sandals High qualityWOMENS Roger Vivier Fushia Sandals Large selection ,
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.