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.Nine West Pruce - Sandals - Women Nine West Sandals online on YOOX United Kingdom - 11484227VN , Stele Ankle Boot - Women Stele Ankle Boots online on YOOX United Kingdom - 11454553XB , SOTOALTO Deleite FASHION SANDALS FOR WOMENStella McCartney Violet Pure Boost SneakersWomen's BCBGMAXAZRIA Brown Platforms special purchase , Dune JETTE black / Combo , adidas by Raf Simons Raf Simons Spirit Low AsymmChloé Hazelnut Brown Stack Heel Slingback Gold Hardware SandalsPEPE CASTELL 10102-pepe Castell SHOES FOR WOMEN , LACOSTE Ribera Lcr LOW-TOP TRAINERS FOR WOMEN , woman Jack Rogers Brown Clare Wedges diversityClarks Originals TRIGENIC FLEX - Trainersmens/womens PATRIZIA Tovei Sandals Orders are welcome , man/woman Kamik Porto Boots Reliable performanceL37 LIBERTAS - Ankle boots , Betula Licensed by Birkenstock Leo Birko-FlorBlue by Betsey Johnson HAZIL - High heels Colour: silverDiemme Sneakers - Men Diemme Sneakers online on YOOX United Kingdom - 11507392KXmen/women Nike Vapor Ultrafly Elite Sneakers & Athletic Nike Various styles , Kanna Sandals - Women Kanna Sandals online on YOOX United Kingdom - 11381289OO , Puma Sneakers - Women Puma Sneakers online on YOOX United Kingdom - 11497498AWPhilipp Plein Court - Women Philipp Plein Courts online on YOOX United Kingdom - 11387556OL , Avril Gau Court - Women Avril Gau Courts online on YOOX United Kingdom - 11430343JSlady Kork-Ease Blue Wedges Primary qualityaXm35776 Cole Haan Pinch Weekender LuxeElegant and sturdy packaging Tabitha Simmons Reyner , Good market Badgley Mischka PaxtonChristian Louboutin Pink Louis Junior Spikes Low Top Sneakers Sneakers , FENTY PUMA by Rihanna Camo Suede Creepers SneakersLADY Rebecca Minkoff Chestnut Espadrille Sandals New design
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.