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.Paloma Barceló Ankle Boot - Women Paloma Barceló Ankle Boots online on YOOX United Kingdom - 11530855HX , Donna Più Sandals - Women Donna Più Sandals online on YOOX United Kingdom - 11331576LO , Tsd12 Ankle Boot - Women Tsd12 Ankle Boots online on YOOX United Kingdom - 11453969MASalvatore Ferragamo Black New Sling SandalsMISS Gina Peters Silver Sandals durabilitySkechers FLEX APPEAL HIGH ENERGY PinkNew Balance Gray - Women's 775 V2 Running Sneakers , HOGL 184200 ZAPATO DE CU?A PARA MUJER , Men/Women Born Beebe Boots Sales online store , Paul Andrew Aiden Canvas & Leather Boot , ANGULUS Ankle boots Colour: sauvage black , Dockers by Gerli Slip-ons Colour: navySam Edelman GIGI - T-bar sandals Colour: rose gold metallic , Men/Women VIONIC Kenley Sneakers & Athletic VIONIC New design , mens/womens ECCO Sport Whistler GORE-TEX? High Boots Breathable shoes , mens/womens ASICS FuzeX? Sneakers & Athletic ASICS best sellerU symbol a trainers , navy blue, GeoxNew Balance MS574 - Trainers - pigment , men/women Sam Edelman Yaro Heels Strong heat and wear resistanceMsgm Boots - Women Msgm Boots online on YOOX United Kingdom - 11495920HKAsh Ankle Boot - Women Ash Ankle Boots online on YOOX United Kingdom - 11530066SH , Fabio Rusconi Court - Women Fabio Rusconi Courts online on YOOX United Kingdom - 11097465FM , 1725.A Ankle Boot - Women 1725.A Ankle Boots online on YOOX United Kingdom - 11452349BNGiuseppe Zanotti Boots - Women Giuseppe Zanotti Boots online on YOOX United Kingdom - 11312126WFMarian Ankle Boot - Women Marian Ankle Boots online on YOOX United Kingdom - 11332597AK , Pierre Balmain Sneakers - Men Pierre Balmain Sneakers online on YOOX United Kingdom - 11580222WDOnline Shopping Reef Swing 2Mephisto Tomasia The Mephisto Tomasia re-imagines the iconic derby for the 21st century with chic, yet comfortable designs!Dior Blue Beaded Jeweled Neoprene Christian Sneakers It 40 Sneakerslady Dolce&Gabbana Red 1111 Formal Shoes durable
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.