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.Rodolphe Menudier Ankle Boot - Women Rodolphe Menudier Ankle Boots online on YOOX United Kingdom - 11515718OIAnna Baiguera Ballet Flats - Women Anna Baiguera Ballet Flats online on YOOX United Kingdom - 11016704KH , CRESSY 50203-cressy FASHION FOOTWEAR FOR WOMEN , Women's Versace Black Pumps Hot saleAdidas Originals By White Mountaineering Sneakers - Men Adidas Originals By White Mountaineering Sneakers online on YOOX United Kingdom - 11263861BQ , Burberry Pink Nude Folkington Hi Top Sneakers SneakersWOMENS Daisy Fuentes Black Slide Sandals Fine workmanship , men/women Aerosoles Plush Song Heels Modern technologymens/womens Nine West Karacurl Heels qualitymen's/women's VOLATILE Raspy Boots New market , Stradivarius | Stradivarius mesh flatform sneakerOscar de la Renta Pamie 55mmLost Ink THEO STUD BLOCK - High heels Colour: blackmen/women Osiris Helix Sneakers & Athletic Osiris Quality products , Santoni Boots - Men Santoni Boots online on YOOX United Kingdom - 11304753LE , Gattinoni Boots - Women Gattinoni Boots online on YOOX United Kingdom - 11507320AB , Hornet Boots - Women Hornet Boots online on YOOX United Kingdom - 11453745TC , J.Born Boots - Women J.Born Boots online on YOOX United Kingdom - 11498404WG , Henderson Ankle Boot - Women Henderson Ankle Boots online on YOOX United Kingdom - 11452297WLIro Ankle Boot - Women Iro Ankle Boots online on YOOX United Kingdom - 11585126ED , Karen Scott Blue Dress New Sandals , Online export store Merrell Moab 2 Vent , Comfortable and natural La Canadienne Tiana , Bandolino Stepa Your new seasonal staple, the cool and chic Bandolino Stepa sandal , ALDO Creiwet Perfect your handsome attire with the Creiwet penny loafer, an ALDO classic!WOMEN Tory Burch Silver Laura Sandals Make full use of materials , LADY Chocolat Blu Grey/Black/Blue Heely Wedges Reliable reputation , woman Converse Black/Silver 544991c Sneakers Louis, in detailWOMEN Giuseppe Zanotti Black New Sandals Bestsellers worldwide , Tory Burch Black Camafloige Multi Print Sandals
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.