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.Stella Mccartney Ankle Boot - Women Stella Mccartney Ankle Boots online on YOOX United Kingdom - 11567194JCSam Edelman MASON Nude / TangerineTommy Hilfiger PENELOPE 4B BlackMm6 Maison Margiela Ankle Boot - Women Mm6 Maison Margiela Ankle Boots online on YOOX United Kingdom - 11564861HR , lady Sam Edelman Blue Flat Sandals Nice colorMen/Women Clarks Franson Top Boots First qualityLaura Biagiotti T-bar sandals Colour: navyMiss Selfridge DANNY - High heeled sandals Colour: bluemens/womens Nike Tanjun Premium Sneakers & Athletic Nike comfortabilitymens/womens ECCO Sport Whistler GORE-TEX? High Boots Breathable shoesOta blucher serraje high top trainers , black, VictoriaConverse Sneakers - Men Converse Sneakers online on YOOX United Kingdom - 11495936EB , Lumberjack Loafers - Men Lumberjack Loafers online on YOOX United Kingdom - 11559073XG , Hogan Sneakers - Men Hogan Sneakers online on YOOX United Kingdom - 11213623OS , Men/Women Keds Vollie LTT Sneakers & Athletic Keds Excellent function , Voile Blanche Sneakers - Men Voile Blanche Sneakers online on YOOX United Kingdom - 11580841AVOroscuro Boots - Women Oroscuro Boots online on YOOX United Kingdom - 11456038CC , Norah Loafers - Women Norah Loafers online on YOOX United Kingdom - 11529448QI , Moschino Sneakers - Women Moschino Sneakers online on YOOX United Kingdom - 11536020TDChie Mihara Court - Women Chie Mihara Courts online on YOOX United Kingdom - 11522613OUStrategia Ankle Boot - Women Strategia Ankle Boots online on YOOX United Kingdom - 11245928FW , Fornarina Ankle Boot - Women Fornarina Ankle Boots online on YOOX United Kingdom - 11494038TFMaintenance capability Sol Sana Judy Mule , Trendy Altra Footwear Instinct 4.5 , Seasonal promotion ECCO Leisure TiePrada Black Leather Wedge Sport Platform Heels Velcro 38.5 SandalsLadies Prada Black New Sneakers Easy to handle , MISS FitFlop Raspberry Flora Slide Sandals product quality , Burberry Beige Leather & "Nova Check" SneakersSalvatore Ferragamo Brown Peep Toe Strappy Sandals ,
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.