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.Paola D'arcano Court - Women Paola D'arcano Courts online on YOOX United Kingdom - 11482334EX , TARKE 7960 WEDGE-HEEL SANDALS FOR WOMEN , CAMPER 18637-036 CASUAL SHOES FOR MAN , Moda In Pelle TULSY black , LACOSTE 31spw0011 Lancelle 007 Grey LOW-TOP TRAINERS FOR WOMENWOMEN Grace Footwear Formal Shoes Diverse new designlady Sam Edelman Sandals Elegant and solemnmen/women mint&berry Heeled mules comfortableSoftclox ULIANA - Platform boots Colour: athrazit , Men/Women Colors of California Espadrilles special promotionmen/women Esprit DASHA - Trainers Various stylesmen/women Summit by White Mountain Brianne Oxfords durable , Vans UA SK8-HI 46 MTE DX - High-top trainers - tact/black , Giuseppe Zanotti Sneakers - Men Giuseppe Zanotti Sneakers online on YOOX United Kingdom - 11555452UQElata Loafers - Women Elata Loafers online on YOOX United Kingdom - 11501868SFVersace Court - Women Versace Courts online on YOOX United Kingdom - 11154052SDSuperga® Sneakers - Women Superga® Sneakers online on YOOX United Kingdom - 11378382NU , Lumberjack Sneakers - Women Lumberjack Sneakers online on YOOX United Kingdom - 11570284BQ , J.Born Ankle Boot - Women J.Born Ankle Boots online on YOOX United Kingdom - 11532893DA3HZlR8Mv inov-8 F-Lite 235 V2 Chill , Quality First Merrell Moab 2 Waterproof , Year-end special promotions M&F Western KimberA balance between toughness and hardness Franco Sarto HaddenNaturalizer Ellis Evolve your style with the cute and classy Ellis from NaturalizerWOMEN Saint Laurent Burgundy Bow Platforms Special promotions at the end of the yearNike Navy Women's Air Max Thea Mid Obsidian 859550-400 Sneakers , womens Nine West Green Niisa Wedges Cheaper than the price , Jimmy Choo Black Patent Leather Pence Thong Cork Sandalslady Prada Red Strappy Sandal Platforms Crazy Price, Birmingham , WOMEN Tory Burch Blac Caroline Pumps auction
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.