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.The Seller Ankle Boot - Women The Seller Ankle Boots online on YOOX United Kingdom - 11497307OO , Antidoti Ankle Boot - Women Antidoti Ankle Boots online on YOOX United Kingdom - 11280858LPShoe Bar Sneakers - Women Shoe Bar Sneakers online on YOOX United Kingdom - 11486463SH , LADY White Studio Wedges Quality first , Converse Limited Edition Sneakers - Women Converse Limited Edition Sneakers online on YOOX United Kingdom - 11509814RP , 18 Kt Ballet Flats - Women 18 Kt Ballet Flats online on YOOX United Kingdom - 11484269UP , NEW BALANCE S030500331btx LOW-TOP TRAINERS FOR WOMEN , BRUNATE 38227 WEDGE ANKLE BOOTS FOR WOMEN , mens/womens Alegria Petal Flats Medium costTOM TAILOR Mules Colour: light blueman/woman ECCO Shape 45 Sleek Slip-On Heels Reliable performanceHogan Sneakers - Women Hogan Sneakers online on YOOX United Kingdom - 11578861GE , Vans Sneakers - Men Vans Sneakers online on YOOX United Kingdom - 11488259QW , men's/women's Eileen Fisher James Boots a wide range of products , Botti Loafers - Women Botti Loafers online on YOOX United Kingdom - 11464619BC , Pantofola D'oro Sneakers - Women Pantofola D'oro Sneakers online on YOOX United Kingdom - 11569622NGRoberto Festa Court - Women Roberto Festa Courts online on YOOX United Kingdom - 11544981FD , Chiara Ferragni Loafers - Women Chiara Ferragni Loafers online on YOOX United Kingdom - 11269541XN , Dior White Christian Quilted Leather Sandals , WOMEN Dior Slingback Wedges Elegant appearanceHigh quality and low overhead Old Gringo Pansy IIStylish and fun Wolverine Rigger Mid CM , Crazy price, Birmingham Taos Footwear PrimoLatest styles LifeStride Relay 2WOMENS Herstyle Black None Formal Shoes a wide range of products , Nike Pink Teal and Yellow Zoom Pegasus 33 Sneakerslady White & Black Sneakers New products in 2344woman Cole Haan Red Kate Sandals Rich on-time delivery , Valentino Black and White Free Rockstud Sandals , Ladies Prada Orange Graffitti Sandals Sale Italy
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.