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.Maria Cristina Ankle Boot - Women Maria Cristina Ankle Boots online on YOOX United Kingdom - 11314885WI , Miu Miu Ballet Flats - Women Miu Miu Ballet Flats online on YOOX United Kingdom - 44939134ORGEOX D641eg-geox LOW-TOP TRAINERS FOR WOMENKICKERS 320122-50 London High Marronwoman Stella McCartney Denim Blue Wedges Modern technologyLadies Birkenstock Taupe 0051463 Sandals Sale online storeNike Bright Crimson/Black/White Kobe Kb Mentality Sneakers , Circa Joan & David White Leather Sandals , Cole Haan Tali Bow Stud Loafer , men's/women's KENDALL + KYLIE Tessa Sandals Carefully selected materials , man/woman Melissa Shoes Ultragirl Basic Flats Stylish and funAdidas DKNY RAMONA - Classic heels - blackSkechers Sport SKYLINE WOODMIST - Trainers - whtNew Balance ML574 - Trainers - hempDsquared2 Boots - Men Dsquared2 Boots online on YOOX United Kingdom - 11159610PPJàjà Sneakers - Men Jàjà Sneakers online on YOOX United Kingdom - 11513148RR , mens/womens Satorisan Heisei-Tie Dye Sneakers & Athletic Satorisan a variety ofle coq sportif VERDON WINTER SPORT - Trainers - black/reglisseman/woman El Naturalista Nectar N5141 Boots Easy to clean surface , Diadora Heritage Sneakers - Men Diadora Heritage Sneakers online on YOOX United Kingdom - 11295704AA , Mercer Amsterdam Sneakers - Men Mercer Amsterdam Sneakers online on YOOX United Kingdom - 11558990XMCavallini Court - Women Cavallini Courts online on YOOX United Kingdom - 11455067GGRichmond Boots - Women Richmond Boots online on YOOX United Kingdom - 11538106TJ , Heliā Ankle Boot - Women Heliā Ankle Boots online on YOOX United Kingdom - 11252804IQAlberto Venturini Sandals - Women Alberto Venturini Sandals online on YOOX United Kingdom - 11390038LWErika Cavallini Court - Women Erika Cavallini Courts online on YOOX United Kingdom - 11516961MBAnya Hindmarch Court - Women Anya Hindmarch Courts online on YOOX United Kingdom - 11431506OP , fcza2QNs Under Armour UA Horizon KTVSergio Rossi Multicolor Fabric and Leather Mules Sandals , Prada Silver Mirrored Leather T-strap Wedge Sandals
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.