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.Bibi Lou Ankle Boot - Women Bibi Lou Ankle Boots online on YOOX United Kingdom - 11037251EULaurence Dacade Ankle Boot - Women Laurence Dacade Ankle Boots online on YOOX United Kingdom - 11482319SR , Officine Del Cuoio Loafers - Men Officine Del Cuoio Loafers online on YOOX United Kingdom - 11485280MV , Vionic Pewter and Leopard Orthotics SandalsTory Burch Black and Cream SandalsAVATAR Chantal FASHION ANKLE BOOTS FOR WOMEN , Prada Orange Great Condition Like New Sandalsmen's/women's Frye Sacha Tall Boots Excellent workmanship , mens/womens Franco Sarto Hudley Loafers Modern technology , men/women Clarks Palm Glow Heels High-quality , Adidas Tamaris Heart & Sole Classic heels - blackmen's/women's Even&Odd VEGAN - Espadrilles business , Karhu Sneakers - Men Karhu Sneakers online on YOOX United Kingdom - 11251880CWBikkembergs Sneakers - Men Bikkembergs Sneakers online on YOOX United Kingdom - 11521075OE , Hogan Sneakers - Women Hogan Sneakers online on YOOX United Kingdom - 11177989BO , Lanvin Espadrilles - Women Lanvin Espadrilles online on YOOX United Kingdom - 11158154CP , M&P Maypol Espadrilles - Women M&P Maypol Espadrilles online on YOOX United Kingdom - 11546040PFPura López Boots - Women Pura López Boots online on YOOX United Kingdom - 11530034CF , Versace Jeans Sneakers - Women Versace Jeans Sneakers online on YOOX United Kingdom - 11563609KLPhilippe Model Sneakers - Women Philippe Model Sneakers online on YOOX United Kingdom - 11433328CJCafènoir Ankle Boot - Women Cafènoir Ankle Boots online on YOOX United Kingdom - 11458734AU , Manila Grace Sandals - Women Manila Grace Sandals online on YOOX United Kingdom - 11177723BD , Versace Black Palazzo Slip-on Sneakers Sneakers , low cost Dr. Martens Rozarya Octavo , German Outlets Anne Klein DakodahNike Women's Air Max Thea Premium Black + White Style/Color: 616723-005 Sneakers , Dior Green * Metallic Leather Strappy Platform Cork Sandalsladies Brown Espadrille Heels Wedges Fair priceladies Christian Louboutin Python Sandals Famous store , lady Charles David Nude New Sandals 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.