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.United Nude Ankle Boot - Women United Nude Ankle Boots online on YOOX United Kingdom - 11535528RMPierre Darré Sandals - Women Pierre Darré Sandals online on YOOX United Kingdom - 11244441JIman/woman Onitsuka Tiger by Asics GEL-PTG Sneakers & Athletic Onitsuka Tiger by Asics Speed refund , Converse ALL STAR CORE OX BlackJanemox By Righi Jr Ankle Boot - Women Janemox By Righi Jr Ankle Boots online on YOOX United Kingdom - 11485522VP , Nike Nike Cortez Ultra Br - Sneakers - Men Nike Sneakers online on YOOX United Kingdom - 11060659JT , LACOSTE 33spj1003 Carnaby B53 Wht-pnk LOW-TOP TRAINERS FOR WOMEN , WOMENS Giuseppe Zanotti Never Worn Platforms special discount priceLadies Birkenstock Purple Arizona Sandals Win highly appreciatedPepe Jeans TINKER PRO-CAMP - Trainers Colour: stagMen/Women Hush Puppies Lolly Chaste Flats comfortablemen/women Miz Mooz Tinka Heels Latest stylesmen's/women's Sperry Songfish Core Boat Sperry bargain , mens/womens EMU Australia Coris Sandals Great choicemens/womens Lucchese Adele Boots Exquisite workmanshipAdidas New Balance ML373 - Trainers - green , Men/Women Imagine Vince Camuto Bavel Heels various kinds , Dsquared2 Sandals - Women Dsquared2 Sandals online on YOOX United Kingdom - 11243258WRBikkembergs Sneakers - Men Bikkembergs Sneakers online on YOOX United Kingdom - 11332224KGmen's/women's etnies Jameson MTW Sneakers & Athletic etnies Perfect processing , Startup. Loafers - Women Startup. Loafers online on YOOX United Kingdom - 11530587XP , Lumberjack Sneakers - Women Lumberjack Sneakers online on YOOX United Kingdom - 11505874DKGuess Sandals - Women Guess Sandals online on YOOX United Kingdom - 11158082OMTod's Sneakers - Women Tod's Sneakers online on YOOX United Kingdom - 11564566PW , Skilled manufacturing Clarks Un Rosa Hi , Andre Assous Silver with Broad Accents Paloma Low Pewter Sandals , Burberry White Goxhill Zip Leather High Top Sneakers Sneakerslady Naturalizer Silver Formal Shoes Not so expensivewomens Stuart Weitzman Black Strappy Platforms Excellent performance , Women's Valentino Off White Rockstud Sandals Excellent craft
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.