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 Ferretti Ankle Boot - Women Marco Ferretti Ankle Boots online on YOOX United Kingdom - 11481421UU , Ovye' By Cristina Lucchi Sandals - Women Ovye' By Cristina Lucchi Sandals online on YOOX United Kingdom - 11564959XK , Converse Chuck Taylor? All Star Mono Canvas Himen's/women's VOLATILE Chica Clogs & Mules durability , mens/womens Yosi Samra Didi Heels Good market , man/woman Baffin Hannah Boots Valuable boutique , Born Rich MENS HITOP BOURBON - High-top trainers , mens/womens Badgley Mischka Hardy Heels High quality and cheap , Wl220vw leather and textile trainers , white, New BalanceAsics Tiger GEL-MAI KO100 - Trainers - yellow , New Look KNOCKED - High heels Colour: bright pink , men/women Columbia Redmond? Mid Waterproof Boots Sufficient supply , Springa Sneakers - Men Springa Sneakers online on YOOX United Kingdom - 11329355DI , Calpierre Sneakers - Men Calpierre Sneakers online on YOOX United Kingdom - 11579474BKDiemme Sneakers - Men Diemme Sneakers online on YOOX United Kingdom - 11500575IO , Hogan Sneakers - Men Hogan Sneakers online on YOOX United Kingdom - 11515140FC , H by Hudson | H By Hudson Bolton tassel loafers in navy suede , Dr Martens | Dr Martens Blaire Leather Strappy Flat Sandals in Black , Guess Sandals - Women Guess Sandals online on YOOX United Kingdom - 11366471AVHogan Sneakers - Women Hogan Sneakers online on YOOX United Kingdom - 11365712NR , Blumarine Court - Women Blumarine Courts online on YOOX United Kingdom - 11514571VBGeox Sneakers - Women Geox Sneakers online on YOOX United Kingdom - 11131065OB , Prada Black Flip Flops Heels Sandals , NUBYy2lV JANE AND THE SHOE Lida , modern Diamond Supply Co. MilanDifferent styles Stuart Weitzman Newdeal , Kamik VulpexLo Even when the weather is bad, you will always look good with the cozy style of the Kamik VulpexLo snow boot! , special function woman Red/Blk Sneakers Discount , Nike Silver 'lunar Elite - Sky Hi' Wedge Sneaker Sneakers , MISS Tory Burch Embroidered Miller Sandals uppers ,
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.