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.Emanuela Passeri Ankle Boot - Women Emanuela Passeri Ankle Boots online on YOOX United Kingdom - 11444575AM , STROVER 80037 BOTíN PLANO DE MUJERSam Edelman DEA black / SuedeGolden Goose Deluxe Brand Red White and Blue Sneakers , lady Prada Black and Red Sandals Stylish and charmingLADY Christian Louboutin Blue 40 Wedges Moderate costswoman Salvatore Ferragamo Black Heels Sandals Price reduction , Papillio CAMERON POP - Platform sandalsCrocs CLASSIC - Slippers Colour: pink/oatmeal , Adidas Nike Sportswear AIR MAX - Trainers - olive/black/green , men/women Proenza Schouler Indian Bootie Boots Extreme speed logisticsRAID MISTICO - High heeled ankle boots Colour: blackmen/women Kenneth Cole Reaction Auto-Pilot Oxfords Comfortable touchSpringa Sneakers - Men Springa Sneakers online on YOOX United Kingdom - 11574412RK , J.Wilton Loafers - Men J.Wilton Loafers online on YOOX United Kingdom - 11561670UG , Bruno Bordese Sneakers - Men Bruno Bordese Sneakers online on YOOX United Kingdom - 11384308KD , Geox Sneakers - Women Geox Sneakers online on YOOX United Kingdom - 11542320MC , So?Queen Sneakers - Women So?Queen Sneakers online on YOOX United Kingdom - 11211806HIHalston Heritage Court - Women Halston Heritage Courts online on YOOX United Kingdom - 11568039WD , Joy Wendel Boots - Women Joy Wendel Boots online on YOOX United Kingdom - 11557710DXSusana Traca Sandals - Women Susana Traca Sandals online on YOOX United Kingdom - 11554922AK , Patrizia Pepe Court - Women Patrizia Pepe Courts online on YOOX United Kingdom - 11299068BQMarsèll Ankle Boot - Women Marsèll Ankle Boots online on YOOX United Kingdom - 11334693BA , womens Givenchy Blac Sandals official websiteNew style New Balance Golf NBG3001 , Comfortable feeling Sanuk Yoga GlamBaffin Apex A Baffin classic that's designed for movement in the extreme cold , SAS Bravo Beat discomfort with the casual and cozy Bravo sandal from SAS , CgKbRC5Y womens Burberry White/Nova-check Wedges CheapWOMEN Jimmy Choo Brown Shaw Platforms Different styles and styles
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.