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.Police 883 Ankle Boot - Women Police 883 Ankle Boots online on YOOX United Kingdom - 11501680PKProenza Schouler Open-Toe Mules - Women Proenza Schouler Open-Toe Mules online on YOOX United Kingdom - 11540527OJ , Tory Burch Ballet Flats - Women Tory Burch Ballet Flats online on YOOX United Kingdom - 11576264CK , Ladies Juicy Couture Palm Print Sneakers Elegant and robust packaging , WOMEN Marchesa Red Ebony Wedges Complete specification areaPAULA URBAN 47-8215 WEDGE-HEEL SANDALS FOR WOMENCalvin Klein Jeans ARTHUR - High-top trainers , men/women Vagabond Slip-ons Fine workmanship , Men/Women Dolce Vita Remie Heels Charming design , Wl410bl trainers , black, New Balanceman/woman Cordani Batiste Boots First batch of customers , A.Testoni Boots - Men A.Testoni Boots online on YOOX United Kingdom - 11548519HB , man/woman Michael Antonio Lines - Lizard Heels Elegant and sturdy set mealAdidas Paradox London Pink PIPER - Classic heels - chamgagne glittermen's/women's Faith JORGIO - Mules Rich on-time delivery , Philippe Model Sneakers - Men Philippe Model Sneakers online on YOOX United Kingdom - 11479769DX , Apepazza Sneakers - Women Apepazza Sneakers online on YOOX United Kingdom - 11522967GIZinda Court - Women Zinda Courts online on YOOX United Kingdom - 11517853UP , Pantanetti Boots - Women Pantanetti Boots online on YOOX United Kingdom - 11536500GD , Silvana Ankle Boot - Women Silvana Ankle Boots online on YOOX United Kingdom - 11529240KDMassimo Santini Sandals - Women Massimo Santini Sandals online on YOOX United Kingdom - 11502725SQ , Rick Owens Boots - Men Rick Owens Boots online on YOOX United Kingdom - 11398559ACDolce Vita Black Cambria Bootie SandalsOutstanding function Magnanni Erardo Lo , ASH Lola You blend with the season in these ASH Lola Star sneakers.Report Keela Perfect your day look with the Report Keela ballet flats , Balenciaga Grey Paris Men's Leather High Top Sneaker 412381 Size42 Sneakers , Women's Brian Atwood Ivory Metallic Platforms Average costswomen Burberry Black Cowling T-strap Sandals special purchasewomen Valentino Black Patent Rockstud Pumps Low price ,
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.