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.Alessandro B Ankle Boot - Women Alessandro B Ankle Boots online on YOOX United Kingdom - 44913841NJ , Jimmy Choo Ankle Boot - Women Jimmy Choo Ankle Boots online on YOOX United Kingdom - 11583480XX , woman Christian Louboutin Brown Sandals AffordableCole Haan Black Leather Patent Open Toe Slides SandalsRebecca Minkoff Ankle Boot - Women Rebecca Minkoff Ankle Boots online on YOOX United Kingdom - 11449258HHMARIA MARE 61029 R1 C6431 Peach Negro SHOES FOR WOMENPEDRO MIRALLES 24601 FASHION ANKLE BOOTS FOR WOMENladies Anne Klein Orange/Cream Sandals For your choiceYOKONO Ibiza041 Burdeos SANDALIA PLANA DE MUJERJonak DERAY - Peeptoe ballet pumps Colour: marine , K-SWISS COURT CLARKSON - Trainers Colour: white/red/blueAdidas Jessica Simpson PAVENY - Sandals - nude blushCalvin Klein Jeans SHANNA - High heeled ankle bootsSkechers Performance GO WALK JOY - Walking trainers , Chocolà Loafers - Women Chocolà Loafers online on YOOX United Kingdom - 11526203CUVans Sneakers - Men Vans Sneakers online on YOOX United Kingdom - 11488444PVMunich Sneakers - Men Munich Sneakers online on YOOX United Kingdom - 11454637VBPantofola d`Oro LAZZARINI SUPERLIGHT CANGURO - Moulded stud football boots Colour: blackmens/womens Adidas Gazelle S&T Schuhe Adequate supply and timely delivery , mens/womens Reebok Furylite Sneakers & Athletic Reebok In short supply , Louis Leeman Sneakers - Men Louis Leeman Sneakers online on YOOX United Kingdom - 11577381RX , Norah Loafers - Women Norah Loafers online on YOOX United Kingdom - 11522964LAMarc Ellis Sandals - Women Marc Ellis Sandals online on YOOX United Kingdom - 11360105UU , Ash Ankle Boot - Women Ash Ankle Boots online on YOOX United Kingdom - 11570426EUwomen Salvatore Ferragamo Doo24268 F670 Pumps Strong heat and heat resistance , Women's Roberto Cavalli Gold Leather Sandals Louis, in detail , ladies Black Fara Formal Shoes Very good quality , Ladies Jimmy Choo Denim Nico Wedges Pleasant feeling , Sam Edelman Black Brown Gold Ivy Sandals , Women's Vince Camuto Multicolor Jewel Sandals durability
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.