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.Kendall + Kylie Boots - Women Kendall + Kylie Boots online on YOOX United Kingdom - 11219318BL , Vicini Tapeet Flip Flops - Women Vicini Tapeet Flip Flops online on YOOX United Kingdom - 11417498OVANTONIO PANIZZOLO 3604 SHOES FOR WOMEN , iHPUMtAA men/women Rialto Collette Boots auction , lady adidas X Yeezy Black/Tan Sneakers Used in durabilityMTNG 51388 Hip Vino BOTíN PLANO DE MUJERwoman Sam Edelman Melon Dayton Sandals Special function , ALMA EN PENA 182 SHOES FOR WOMENman/woman Vaneli Eara Heels Popular tide shoes , Diadora B.ELITE BOLDER - Trainers , men's/women's Cole Haan Boothbay Slip-On Loafer Loafers Shopping promotion , Adidas Steve Madden IRENEE - Sandals - grey , men/women Hush Puppies Aiden Clever Oxfords Quality products , Men/Women Eileen Fisher Tall Boots Sales online store , Men/Women Rieker 41730 Boots New products in 2058Lumberjack Sneakers - Women Lumberjack Sneakers online on YOOX United Kingdom - 11344291SBReebok Sneakers - Men Reebok Sneakers online on YOOX United Kingdom - 11080172RA , men's/women's LAUREN Ralph Lauren Betha II Heels leading the fashionHogan Rebel Sneakers - Men Hogan Rebel Sneakers online on YOOX United Kingdom - 11298378BBBikkembergs Boots - Women Bikkembergs Boots online on YOOX United Kingdom - 11464477IC , Prada Boots - Women Prada Boots online on YOOX United Kingdom - 11496901AKCedric Charlier Sandals - Women Cedric Charlier Sandals online on YOOX United Kingdom - 11364176OIOlFsCgOZ PARC City Boot Pier Espadrille , Special price Superfeet Premium BlackLadies Dolce&Gabbana Silver Dauphine Logo Sandals High quality and cheapwomens Tommy Hilfiger White Espadrille Wedges Win highly appreciated , ladies Pedro Garcia Black Penny Sandals Different products , LADY Stuart Weitzman Black Axis Sandals environmentally friendly , MISS Paul Green Cuoio Cayanne Sandals Low costs , woman Valentino Black/White Rockstud Sandals Special function
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.