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.Janet & Janet Boots - Women Janet & Janet Boots online on YOOX United Kingdom - 11379876JV , women Naturalizer Black Wedges Immediate deliveryChristian Louboutin White Blue Red Yellow Black Masteralta Sneaker Loubitag Flat Graffiti Sneakers Slides B066 Sneakers , 3XMPHsYa men/women Sbicca Moxie Sandals negotiation , Adidas By Yohji Yamamoto Sneakers - Men Adidas By Yohji Yamamoto Sneakers online on YOOX United Kingdom - 11463790VXman/woman Kenneth Cole New York Quinley Boots Won highly appreciated and widely trusted at home and abroad , MARIA MARE 66698 C32824 Piedra FASHION SANDALS FOR WOMEN , GIOSEPPO Buni 24090 SANDALIA PLANA DE MUJER , DESCANFLEX 16355 ZAPATO DE CU?A PARA MUJERFENTY PUMA by Rihanna Black Creeper Sneakers , women Hermès White Flat Sandals Charming designMen/Women Woolrich Dove Creek Slippers Preferred material , mens/womens FitFlop Banda Roxy Sandal Sandals comfortable , mens/womens Lucky Brand Latonya Boots Durable service , mens/womens SKECHERS Highlanders Boots Good quality , mens/womens Aquatalia James Oxfords a wide variety of goodsCalvin Klein Jeans BIFF - Trainers - black , Steve Madden ADORNED - High heeled sandals Colour: blackman/woman Dr. Martens Vintage 1490 Boots Reliable qualityPuma BIG SEAN - Trainers - black/whiteAndìa Fora Boots - Men Andìa Fora Boots online on YOOX United Kingdom - 44861700RT , Hypnosi Sneakers - Women Hypnosi Sneakers online on YOOX United Kingdom - 11087635XHTod's Boots - Women Tod's Boots online on YOOX United Kingdom - 11088175PX , Ballin Sandals - Women Ballin Sandals online on YOOX United Kingdom - 11576225GG , Sargossa Court - Women Sargossa Courts online on YOOX United Kingdom - 11380712JE , Geox Ballet Flats - Women Geox Ballet Flats online on YOOX United Kingdom - 11530129PNAdidas Originals Sneakers - Women Adidas Originals Sneakers online on YOOX United Kingdom - 11552204DDtiYKF42W Deer Stags Herman Tassel Loafer , Fendi Off-white Mother-of-pearl Shell Vamps Mule Kitten Resort Vacation Sandals , ladies Nike Black/Gray/White Siren Sneakers Strong heat and wear resistance
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.