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.O.X.S. Rubber Soul Sneakers - Women O.X.S. Rubber Soul Sneakers online on YOOX United Kingdom - 11457849RH , I.N.K. Shoes Ankle Boot - Women I.N.K. Shoes Ankle Boots online on YOOX United Kingdom - 11474734NERed Wing Shoes Boots - Men Red Wing Shoes Boots online on YOOX United Kingdom - 11561246CKMariano Di Vaio Sneakers - Men Mariano Di Vaio Sneakers online on YOOX United Kingdom - 11477473JHMen/Women Propet TravelActiv Mary Jane Sneakers & Athletic Propet We have won praise from our customers.GEOX U840ha-geox ANKLE BOOTS FOR MENVans ERA Red / White , N.D.C. Made By Hand Espadrilles - Women N.D.C. Made By Hand Espadrilles online on YOOX United Kingdom - 11195729NLAlexander McQueen Rose Red Women's Terena Hi Tops SneakersYOKONO Carla 007 Cuero FASHION BOOTS FOR WOMENLADY Tory Burch Tan/Brown Sally Wedges High quality , MISS Steve Madden Grey Bryanna Sneakers Reasonable price , Fila ARCADE - Trainers - white , Nine West Falardo Platform Wedge Slide SandalAdidas Tommy Hilfiger HYBRID ICONIC - Trainers - red , BOSS CASUAL ORLAND LOWP - Trainers - blackman/woman Summit by White Mountain Edlyn Sandals Quality productsman/woman Steve Madden Manifest Oxfords Quality and quantity guaranteed , mens/womens Lacoste L.IGHT - Trainers buymen/women Paul Smith Egan Boot Boots Long-term reputation , Moschino Loafers - Women Moschino Loafers online on YOOX United Kingdom - 11535980AG , men/women Calou Stockholm Katty Clogs & Mules Attractive and durable , D.A.T.E. Sneakers - Women D.A.T.E. Sneakers online on YOOX United Kingdom - 11574432BR , Lumberjack Sandals - Women Lumberjack Sandals online on YOOX United Kingdom - 11570322EECasadei Ankle Boot - Women Casadei Ankle Boots online on YOOX United Kingdom - 11507925NHSigerson Morrison Sandals - Women Sigerson Morrison Sandals online on YOOX United Kingdom - 11452502BATod's Mustard Yellow Ritz Strap Sandals , 5tHIphjP womens Chloé Wedges Low priceInternational big name Columbia Goodlife Chelsea WP , WOMENS Zara Slingback Sandals Rich on-time delivery
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.