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.Divine Follie Ballet Flats - Women Divine Follie Ballet Flats online on YOOX United Kingdom - 11512027UIAlberto Fermani Court - Women Alberto Fermani Courts online on YOOX United Kingdom - 11378031TO , Cavallini Ballet Flats - Women Cavallini Ballet Flats online on YOOX United Kingdom - 11488278UNLOLAS S046903275mch FASHION LOAFERS FOR WOMENwomens Aerosoles Blue Leather Wedges durable , Adidas Originals Stan Smith New Bold - Sneakers - Women Adidas Originals Sneakers online on YOOX United Kingdom - 11436256BQIslo Isabella Lorusso Court - Women Islo Isabella Lorusso Courts online on YOOX United Kingdom - 11160150EE , ladies Prada Black 1 Formal Shoes The first set of comprehensive specifications for customers , 5.11 Tactical Evo 8" Waterproof w/ Side ZipChloé Black Kasia Quilted Wedge Sneaker Sneakers , Cole Haan Emory 40mm Bow Wedge IIMen/Women Blowfish Bilocate Boots a wide range of productsAdidas New Balance MSX90 - Trainers - greymen's/women's Nanette nanette lepore Daylight Heels Special purchase , Men/Women Tamaris HEITI - Sandals King of the crowd , Adidas Candice Cooper ROCK - Trainers - apache nero/vitello biancoMOA - Master of Arts MIKEY PRINTED - Trainers Colour: whitemen/women Vaneli Subira Flats A balance between toughness and hardness , men's/women's Jack Rogers Sparkle Alana Jelly Sandals Seasonal hot sale , Pierre Hardy Sneakers - Men Pierre Hardy Sneakers online on YOOX United Kingdom - 11578802LDPremiata Sneakers - Women Premiata Sneakers online on YOOX United Kingdom - 11509913LNC'est Moi Court - Women C'est Moi Courts online on YOOX United Kingdom - 11467551CBGiuseppe Zanotti Sneakers - Women Giuseppe Zanotti Sneakers online on YOOX United Kingdom - 11056965BK , John Fluevog Wine Operettas Malibran PumpsWiSLaOLX Paul Smith Grand Stripe Sneaker , Pleasant appearance Birkenstock London Soft Footbed , DKNY Brown Brayden Binding Fashion Sneakers 980 Tan / 39 Eu Sneakers , WOMENS Valentino Jewled Pumps Formal Shoes Very good color , Vince Metallic Remy / / Eu 39.5 Sandalswoman Stuart Weitzman Black Gladiator Sandals Affordable
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.