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.Maison Margiela Flip Flops - Women Maison Margiela Flip Flops online on YOOX United Kingdom - 11122261NQJeffrey Campbell Sandals - Women Jeffrey Campbell Sandals online on YOOX United Kingdom - 11126186AR , MTNG 69064 LOW-TOP TRAINERS FOR WOMENADIDAS Bb9788 HIGH-TOP TRAINERS FOR MENlady Miu Miu Nude Bow Sandals Make full use of materialsMISS Nike Blue Force Hurache Sneakers Elegant and stable packagingwomens Steve Madden Multi Colored Sandals Most economicalFendi Blue Multi Color Flowerland Slide SandalsMISS Ash Beige Limited Platforms Excellent craftMen/Women Bogs Amanda Slip-On Boot Boots Cost-effectivemen/women Taryn Rose Danielle Flats Great variety , man/woman CHLOE GOSSELIN Anemone Heels excellentNike Mercurial Victory VI NJR FGMen/Women Clarks Delana Venna Sandals Easy to clean surface , Victoria Shoes BASKET LONA PLATAFORMA - TrainersFitflop Slippers - Men Fitflop Slippers online on YOOX United Kingdom - 11474549XRTod's Loafers - Men Tod's Loafers online on YOOX United Kingdom - 11415228TF , Adidas Head over Heels by Dune PETUNIA - Classic ankle boots - black , Loriblu Court - Women Loriblu Courts online on YOOX United Kingdom - 11472625UFAlbano Court - Women Albano Courts online on YOOX United Kingdom - 11543020NFPreventi Sandals - Women Preventi Sandals online on YOOX United Kingdom - 11447447UR , Alberto Venturini Boots - Women Alberto Venturini Boots online on YOOX United Kingdom - 11468081UA , Sergio Rossi Boots - Women Sergio Rossi Boots online on YOOX United Kingdom - 11565392XVTory Sport Sneakers - Women Tory Sport Sneakers online on YOOX United Kingdom - 11496416PF , Elena Iachi Sneakers - Women Elena Iachi Sneakers online on YOOX United Kingdom - 11574063CFClarks Ankle Boot - Women Clarks Ankle Boots online on YOOX United Kingdom - 44964804BQ , Philippe Model Sneakers - Men Philippe Model Sneakers online on YOOX United Kingdom - 11565307XA , Christian Louboutin Brown Lizard Skin SandalsVarious Patricia Green Celia CableBalenciaga Gray Men's Arena Leather Sneakers (70564) Sneakers
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.