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.NIKE 749869-103 LOW-TOP TRAINERS FOR WOMENWOMENS Dior Black Initi Platforms Characteristic8luji7SP Men/Women Justin MSL504 Boots comfortable , FitFlop LUMY LEATHER SLIDE Gold , ladies Rebecca Minkoff Sandy Sandals A balance between toughness and hardnessmen's/women's Adrianna Papell Hestia Heels Various styles , Reebok Classic Trainers - bare beige/white , Mango BOLTON - High-top trainers Colour: white , Men/Women ALDO NYDAOWEN - Trainers High securityASOS DESIGN | ASOS Chelsea Boots in Brown Leather , Adidas Cosmoparis MAKEA - High heels - nudeCasta?er BELONA - High heeled sandals Colour: verde kakiadidas Performance PUREBOOST GO - Neutral running shoes , mens/womens Tommy Hilfiger Safire Boots Easy to use , Senso WYNN - High heeled ankle boots , Ambitious Boots - Men Ambitious Boots online on YOOX United Kingdom - 11462692AFHi-Tec Sneakers - Men Hi-Tec Sneakers online on YOOX United Kingdom - 11522295WX , Patrizia Pepe Boots - Men Patrizia Pepe Boots online on YOOX United Kingdom - 11492155DL , Valetti Espadrilles - Women Valetti Espadrilles online on YOOX United Kingdom - 11474294FX , Gioseppo Sneakers - Women Gioseppo Sneakers online on YOOX United Kingdom - 11456406FE , Peserico Sandals - Women Peserico Sandals online on YOOX United Kingdom - 11540164AA , Formentini Ankle Boot - Women Formentini Ankle Boots online on YOOX United Kingdom - 11479325AP , Poetic Licence Sandals - Women Poetic Licence Sandals online on YOOX United Kingdom - 11482074OCJ.Crew Pink Lia Blush Midheel Sandals , Donald J. Pliner Brown Cute Sandals , UmD7O0zX GIOSEPPO 41096 HIGH-TOP TRAINERSFOR WOMEN , Highly appreciated and widely trusted in and out Dirty Laundry Tycen Canvas , Various styles Palladium Pampa Hi Cuff , Personalization trend Diesel Gunner - 12Women's Miu Miu Platform Sandals Wedges wear-resistant
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.