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.Tolin Venezia Ankle Boot - Women Tolin Venezia Ankle Boots online on YOOX United Kingdom - 11487370UF , Álvaro González Flip Flops - Women Álvaro González Flip Flops online on YOOX United Kingdom - 11558129AT , Moda Italia Loafers - Women Moda Italia Loafers online on YOOX United Kingdom - 11519348WI , Kenneth Cole New York Design 10505SKECHERS Relaxed Fit Creston - ErieBRUNO&PAOLA S003647001man BOTíN PLANO DE MUJER , Converse CHUCK TAYLOR ALL STAR II BASKETWEAVE FUSE HI Ecru / White / Red , Dibrera By Paolo Zanoli Loafers - Men Dibrera By Paolo Zanoli Loafers online on YOOX United Kingdom - 11565281TN , MARIA MARE 61004 C21008 Napal Taupe SHOES FOR WOMENwomen Lucky Brand Pinenut Padgitte Sandals Aesthetic appearance , CLARKS Everlay Luna ZAPATO CONFORT DE MUJER , ladies Valentino Brown 0400000248479 Platforms New product , mens/womens LifeStride Nitro Flats Stylish and funman/woman Tommy Hilfiger Poma2 Boots General productMen/Women Tommy Hilfiger Neoline Flats cheap , Tamaris HEITI - Heeled mulesLacoste Lancelle 3 Eye 218 1 , Grenson | Grenson Declan chelsea boots in tan suede , Chilver top leather ankle boots , black, ClarksLacoste AMPTHILL - High-top trainers - khaki/tanCult Sneakers - Men Cult Sneakers online on YOOX United Kingdom - 11419183AN , Jack & Jones | Jack & Jones sneakers with panel details , Cecil Sandals - Women Cecil Sandals online on YOOX United Kingdom - 11461065LDHannibal Laguna Court - Women Hannibal Laguna Courts online on YOOX United Kingdom - 11541900KIFiorentini+Baker Flip Flops - Women Fiorentini+Baker Flip Flops online on YOOX United Kingdom - 11302085ICElle Ankle Boot - Women Elle Ankle Boots online on YOOX United Kingdom - 11552255FJ , Enrico Antinori Sandals - Women Enrico Antinori Sandals online on YOOX United Kingdom - 11546322NE , Roger Vivier Sandals - Women Roger Vivier Sandals online on YOOX United Kingdom - 11399076XFeconomic adidas CF Ilation 2.0 , Practical and economical CHACAL 4009-chacal ,
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.