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.01000010 By Boccaccini Boots - Men 01000010 By Boccaccini Boots online on YOOX United Kingdom - 11531041OMMarian Ankle Boot - Women Marian Ankle Boots online on YOOX United Kingdom - 11520192HM , Lemon Jelly Sandals - Women Lemon Jelly Sandals online on YOOX United Kingdom - 11248332CL , Premiata Ankle Boot - Women Premiata Ankle Boots online on YOOX United Kingdom - 11529783DQ , 24HORAS 23367 ZAPATO CONFORT DE MUJER , IGNITE Flash evoKNIT Women's Training Shoes | Island-Whisper White-White | PUMA Private Sale | PUMA United StatesParis Hilton SPELLED SATIN NaturalConverse One Star One Star Ox - Sneakers - Women Converse One Star Sneakers online on YOOX United Kingdom - 11551712GGDune London Osha - Ankle Boot - Women Dune London Ankle Boots online on YOOX United Kingdom - 11555442QT , woman adidas Rose Gold/White Superstars Sneakers Orders are welcomeVAQUETILLAS 20161 Cuadros Platino SANDALIA BIO PARA MUJERCUMBIA 30551 Azul FASHION SANDALS FOR WOMEN , New Balance MX624 - Trainers Colour: white/navymens/womens Sam Edelman Millard Boots Characteristics , men/women Indigo Rd. She Sandals elegant , Men/Women Sam Edelman Jayne Heels High-qualityGentle Souls by Kenneth Cole Inka , Suede classic + leather trainers , grey/white, Puma , Folk Boots - Men Folk Boots online on YOOX United Kingdom - 11249131MA , Adidas Skechers ON THE GO JOY - Ankle boots - blackRiver Island | River Island Leather Flower Tassel Tie Up Sandals , man/woman Northside Back Country Boots Ideal gift for all occasionsAdidas Originals Boots - Men Adidas Originals Boots online on YOOX United Kingdom - 11518806EQ , Roberto Cavalli Sneakers - Men Roberto Cavalli Sneakers online on YOOX United Kingdom - 11517364FHMen/Women SKECHERS D'Lites - Biggest Fan Sneakers & Athletic SKECHERS Crazy price, Birmingham , Alisee.. Sandals - Women Alisee.. Sandals online on YOOX United Kingdom - 11476412DS , Vince. Sandals - Women Vince. Sandals online on YOOX United Kingdom - 11463254QV , Camper Misia - Sandals - Women Camper Sandals online on YOOX United Kingdom - 11436292SXwomens Dansko Navy Priya Sandals Let our products go out into the worldladies Deena & Ozzy Wedges Not so expensive
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.