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.Liu ?Jo Ankle Boot - Women Liu ?Jo Ankle Boots online on YOOX United Kingdom - 11557203LB , Alberto Fermani Ankle Boot - Women Alberto Fermani Ankle Boots online on YOOX United Kingdom - 11294655SWMally Ankle Boot - Women Mally Ankle Boots online on YOOX United Kingdom - 11474177RIDonna Più Loafers - Women Donna Più Loafers online on YOOX United Kingdom - 11527008JE , STROVER 27111 WEDGE-HEEL SANDALS FOR WOMEN , Tommy Hilfiger ICONIC ELBA BASIC SLING BACK blackwomen CL by Laundry Orange Wedges Let our goods go out into the worldLEVIS Vchi0002s Chicago 0047 Red LOW-TOP TRAINERS FOR WOMENTHIERRY RABOTIN 1436 ZAPATO DE CU?A PARA MUJERWOMENS Free People New Gladiators Sandals durability , LADY Anne Klein Black Suede Sandals Repairman/woman SOLE Beach Flips Sandals Primary qualitymen's/women's Proenza Schouler PS28198 Sandals modern , Leather trainers , ecru print, VejaMM6 Maison Margiela Mary Jane Bootie , men's/women's Franco Sarto Sela Clogs & Mules Pleasant appearance , Reebok | Reebok Combat Noble Sneakers In Black CN0742 , Kennel + Schmenger INDRA - Platform boots Colour: schwarzMen/Women SKECHERS Performance GOStrike? Sneakers & Athletic SKECHERS Performance Complete specification rangemens/womens Calvin Klein Kovan Sneakers & Athletic Calvin Klein Known for its excellent quality , Altraofficina Sandals - Women Altraofficina Sandals online on YOOX United Kingdom - 11552697LF , Janet Sport Sneakers - Women Janet Sport Sneakers online on YOOX United Kingdom - 11246725KCPhilippe Model Sneakers - Women Philippe Model Sneakers online on YOOX United Kingdom - 11269785DCEmanuélle Vee Sandals - Women Emanuélle Vee Sandals online on YOOX United Kingdom - 11559035HN , Paul Andrew Sandals - Women Paul Andrew Sandals online on YOOX United Kingdom - 11343677PBRuco Line Sneakers - Women Ruco Line Sneakers online on YOOX United Kingdom - 11222687OC , Yw08TvPD DVS Shoe Company Revival Split , 9sxpZ3QY Bershka | Bershka patent brogue , Popular tide shoes Massimo Matteo Thong 17Various types and styles DC Villain WNT ,
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.