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.Marco De Vincenzo Sneakers - Women Marco De Vincenzo Sneakers online on YOOX United Kingdom - 11339891IT , Marco De Vincenzo Sandals - Women Marco De Vincenzo Sandals online on YOOX United Kingdom - 11536741RN , Anna F. Sandals - Women Anna F. Sandals online on YOOX United Kingdom - 11380229FA , Tsd12 Ankle Boot - Women Tsd12 Ankle Boots online on YOOX United Kingdom - 11456288CD , Saint Laurent Flame U Sneaker Sneakers , IGNITE Limitless SR-71 Running Shoes | Ribbon Red-Puma BlackApl® Athletic Propulsion Labs Sneakers - Men Apl® Athletic Propulsion Labs Sneakers online on YOOX United Kingdom - 11405287VN , Ivory with Gold Specks. Italia Torino Sneakers , men/women FLY LONDON Yomi765Fly Boots Modern modeMen/Women Paul Green Starsky Sandals comfortableJadia ver patent leather stiletto heel sandals , nude, Cosmoparis , Men/Women Alegria Eliza Boots Known for its good quality , Tod's Sneakers - Women Tod's Sneakers online on YOOX United Kingdom - 11569666LT , men/women Steve Madden Bounded Sneakers & Athletic Steve Madden Very good classification , men's/women's ASICS Tiger GEL-PTG MT Sneakers & Athletic ASICS Tiger Selected materials , Reebok ALL TERRAIN CRAZE - Trail running shoes - black/primal red/ash , mens/womens Clarks Tri Amelia Sneakers & Athletic Clarks good quality , Leather Crown Sneakers - Men Leather Crown Sneakers online on YOOX United Kingdom - 11528927AI , Giuseppe Zanotti Sneakers - Men Giuseppe Zanotti Sneakers online on YOOX United Kingdom - 11261491SU , Men/Women PUMA Basket Classic LFS Sneakers & Athletic PUMA Elegant and sturdy packaging , Valetti Court - Women Valetti Courts online on YOOX United Kingdom - 11474046EU , Valleverde Sandals - Women Valleverde Sandals online on YOOX United Kingdom - 11547529GIRick Owens Sneakers - Women Rick Owens Sneakers online on YOOX United Kingdom - 11395718PF , Bruno Premi Sandals - Women Bruno Premi Sandals online on YOOX United Kingdom - 11443563CW , Dr. Martens Sneakers - Women Dr. Martens Sneakers online on YOOX United Kingdom - 11347713FT , Lush design Jessica Simpson Radeline , Practical and economical Corral Boots A3303Stuart Weitzman Black 45 Nudist Traditional Patent Leather Kitten Heel Sandals , ladies Alexandre Birman Gold Sandals Easy to handleWOMEN Off-White™ Black Multi Belt Sandals Reliable performance
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.