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.LODI Vigor FASHION FOOTWEAR FOR WOMENLACOSTE 33spj003-lacoste LOW-TOP TRAINERS FOR WOMENManolo Blahnik Tan & Clear SandalsNike Air Max Thea Ultra Flyknit - Sneakers - Women Nike Sneakers online on YOOX United Kingdom - 11222837DB , O6 The Gold Edition Sandals - Women O6 The Gold Edition Sandals online on YOOX United Kingdom - 11463970GJ , WOMENS Tory Burch Lucia Wedges At an affordable pricePATRICIA MILLER S025801000api ZAPATO DE SALóN PARA MUJERLADY Jack Rogers Gold Liliana Sandals Elegant shapeman/woman Frye Julie Combat Boots Optimal price , man/woman Frye Claude Tall Boots At an affordable pricemen/women Dr. Martens Jemima Chukka Boot Boots Order welcome , man/woman Diadora Evo Run Sneakers & Athletic Diadora OnlineAdidas Dune London GLAMEROUS - Mules - white , Adidas Buffalo CITRONELLE - High heels - black , Adidas L'INTERVALLE ROCHESTER - Platform boots - blackSperry Sneakers - Men Sperry Sneakers online on YOOX United Kingdom - 11514318PO , Zinda Court - Women Zinda Courts online on YOOX United Kingdom - 11407454GSLerre Court - Women Lerre Courts online on YOOX United Kingdom - 11498232BPMbt Sandals - Women Mbt Sandals online on YOOX United Kingdom - 11560954WI2Star Sneakers - Women 2Star Sneakers online on YOOX United Kingdom - 11553950GRPrimabase Sneakers - Women Primabase Sneakers online on YOOX United Kingdom - 11332672KTAntonio Marras Boots - Women Antonio Marras Boots online on YOOX United Kingdom - 11467434HV , Scholl Ballet Flats - Women Scholl Ballet Flats online on YOOX United Kingdom - 11481675BU , Roger Vivier Court - Women Roger Vivier Courts online on YOOX United Kingdom - 11319728VK , Cafènoir Ankle Boot - Women Cafènoir Ankle Boots online on YOOX United Kingdom - 11515327SWGet It Sandals - Women Get It Sandals online on YOOX United Kingdom - 11437059KL , Santoni Ankle Boot - Women Santoni Ankle Boots online on YOOX United Kingdom - 11543180DRQupid Black Mesh Fabric Reckless-02x SneakersGuarantee quality and quantity Frye Carson Ankle ZipArche Aberal Liven up your wardrobe with the Arche Aberal bootie ,
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.