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.El Campero Ankle Boot - Women El Campero Ankle Boots online on YOOX United Kingdom - 11546049KTEmporio Armani Court - Women Emporio Armani Courts online on YOOX United Kingdom - 11523456FW , Nike Air Zoom Fearless Flyknit - Sneakers - Women Nike Sneakers online on YOOX United Kingdom - 11203056LUwoman Jimmy Choo Black Pandora Wedges Reliable quality , Women's Wanted Multi-color Sandals Elegant and robust packaging , LOLAS S048304637aat ZAPATO DE SALóN PARA MUJERBALLERI 1770-3 Burdeos FASHION FOOTWEAR FOR WOMEN , men's/women's Merrell Inde Lave Slip-On Loafers Cheap , Wallis CALISTA - Classic heelsCalvin Klein Jeans ANDIS - High-top trainers - black , adidas Golf ADICROSS CLASSIC - Golf shoes - white/greenMen/Women Daniel Green Lilah Slippers New varieties are launchedAdidas Helia High heeled sandals - raso red , man/woman Teva Arrabelle Sandal Leather Heels The highest quality material , man/woman MIA Cori Sneakers & Athletic MIA The latest technology , D.A.T.E. Originals Sneakers - Men D.A.T.E. Originals Sneakers online on YOOX United Kingdom - 44752633IGPhilipp Plein Sneakers - Men Philipp Plein Sneakers online on YOOX United Kingdom - 11505282LLman/woman Hush Puppies Chazy Dayo Sneakers & Athletic Hush Puppies Economical and practical , Ras Sneakers - Women Ras Sneakers online on YOOX United Kingdom - 11478223GHPrincess® Bologna Loafers - Women Princess® Bologna Loafers online on YOOX United Kingdom - 11456823XRMaison Margiela Sneakers - Women Maison Margiela Sneakers online on YOOX United Kingdom - 11334373IUrHKPLauC Blue by Betsey Johnson SageSeasonal promotion Asolo Shiraz GV MMFine workmanship Clarks Cheyn Ava , ladies Giuseppe Zanotti Multicolor Sneaker Wedges First group of customersMM6 Maison Martin Margiela Pink Silver Glitter Sneakers Sneakerswomens Dolce&Gabbana Brown Men's Sandals Modern and elegant fashionlady Nicholas Kirkwood Pink Sandals Easy to handleGiuseppe Zanotti Black Lorenz Wedge Sneaker Sneakers , Ladies White/Blue Boys High Sneakers Sneakers Characteristic
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.