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.Colors Of California Sneakers - Women Colors Of California Sneakers online on YOOX United Kingdom - 11378083UH , Isabel Marant Ballet Flats - Women Isabel Marant Ballet Flats online on YOOX United Kingdom - 11214556SP , Antonio Marras Loafers - Women Antonio Marras Loafers online on YOOX United Kingdom - 11465684CDUnisa Ankle Boot - Women Unisa Ankle Boots online on YOOX United Kingdom - 11536202RVWomen's Zara Green Sandals Reliable performance79GRAmWu Men/Women Splendid Dale Boots fine , CASTELLANISIMOS C201600-ng ZAPATO DE SALóN PARA MUJER , men/women Adidas Gazelle Shoes Schuhe reliable quality , New Look TED - Classic heels Colour: blackmens/womens Vaneli Maryam Heels Various stylesASOS DESIGN | ASOS DESIGN Thyme Embellished Tie Leg Flatformsadidas Originals SAMBA OG - Trainers Colour: crystal white/chalk pearl , men's/women's DNA Footwear BV Sandals Maintenance capability , Men/Women Walking Cradles Hazel Heels renewed on timeMen/Women Blondo Float Waterproof Boots Easy to useAdidas Lazamani Ankle cuff sandals - brownAsfvlt Sneakers - Men Asfvlt Sneakers online on YOOX United Kingdom - 11244117LNAsfvlt Sneakers - Men Asfvlt Sneakers online on YOOX United Kingdom - 11497992OLTod's Boots - Men Tod's Boots online on YOOX United Kingdom - 11035405EA , Adidas Victoria Shoes DEPORTIVO BASKET GLITTER - Trainers - marino , Gianfranco Lattanzi Loafers - Men Gianfranco Lattanzi Loafers online on YOOX United Kingdom - 11547016DPmen/women adidas Running Questar CC Sneakers & Athletic adidas Running New varieties are launchedmens/womens PARC City Boot High Line Sneakers & Athletic PARC City Boot Very practical , Grandinetti Sandals - Women Grandinetti Sandals online on YOOX United Kingdom - 11462586LE , Cult Open-Toe Mules - Women Cult Open-Toe Mules online on YOOX United Kingdom - 11473185FNSamuela Pace Court - Women Samuela Pace Courts online on YOOX United Kingdom - 11557480EDTod's Ankle Boot - Women Tod's Ankle Boots online on YOOX United Kingdom - 11346199WAInnovative design KENDALL + KYLIE Kelsyhigh quality Yellow Box Myleenewomens Tory Burch Metallic Bronze/Grey Wedges Reliable performance
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.