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.Jessica Simpson Ankle Boot - Women Jessica Simpson Ankle Boots online on YOOX United Kingdom - 11506574SC , ( Verba ) Sneakers - Men ( Verba ) Sneakers online on YOOX United Kingdom - 11369059VR , SKECHERS 38472 WEDGE-HEEL SANDALS FOR WOMEN , Basket Platform Canvas Women's Sneakers | Blue Flower-Puma SilverCALIFERS Jaae-327b41-negro Mujer Piel Jaae-327b41-negro WEDGE-HEEL ESPADRILLES FOR WOMENlady BCBGMAXAZRIA Black 001 Formal Shoes Big clearance sale , WOMENS Balenciaga Black Leather Sandals King of the quantityladies See by Chloé Black Sandals Nice color , AVANCE Men 057940 FASHION SANDALS FOR WOMEN , men's/women's Keen Hoodoo III Boots Price reduction , Men/Women Franco Sarto Stella Loafers Export , Bullboxer High-top trainers - blackDune London GENE - MulesPretty Ballerinas JUNGLA - Slip-onsMelvin & Hamilton RICO - Classic ankle boots Colour: black/navyAdidas Keen UNEEK - Walking sandals - orange/off-white , Johnston & Murphy Conard Casual Dress Cap Toe Chukka , Dolfie Boots - Men Dolfie Boots online on YOOX United Kingdom - 11529080VO , Ancarani Sandals - Women Ancarani Sandals online on YOOX United Kingdom - 11378922IIDeimille Sandals - Women Deimille Sandals online on YOOX United Kingdom - 11556451UWPura López Sandals - Women Pura López Sandals online on YOOX United Kingdom - 11516171SC , Cesare P. Sneakers - Women Cesare P. Sneakers online on YOOX United Kingdom - 11052251NXTsakiris Mallas Sneakers - Women Tsakiris Mallas Sneakers online on YOOX United Kingdom - 11458230XVAquazzura Ballet Flats - Women Aquazzura Ballet Flats online on YOOX United Kingdom - 11463425MDPaul Andrew Court - Women Paul Andrew Courts online on YOOX United Kingdom - 11495079KR , High security Sanuk Yoga Sunshineladies Dolce&Gabbana Red Wooden Wedges Different styles and stylesFendi Multicolor Flowerland Crisscross Sport Slide Pink/Multi SandalsChristian Louboutin Black Peep Toe Mary Jane Pumpswomen Céline Tan Leather Heels Sandals Most practical
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.