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.BRUNATE 50759 FASHION SANDALS FOR WOMEN , Hummel SLIMMER STADIL LOW MarineWeejuns® By G.H. Bass & Co Loafers - Men Weejuns® By G.H. Bass & Co Loafers online on YOOX United Kingdom - 11214907TQVia Roma 15 Ankle Boot - Women Via Roma 15 Ankle Boots online on YOOX United Kingdom - 11503074PL , Moa Master Of Arts Sneakers - Women Moa Master Of Arts Sneakers online on YOOX United Kingdom - 11426455UF , Loretta By Loretta Sandals - Women Loretta By Loretta Sandals online on YOOX United Kingdom - 11373962AIMISS Fendi Green Hightop Sneakers Sneakers Low price , LADY Croft & Barrow Pewter Wedges bestsell , Men/Women Easy Spirit Marvina Sandals Environmentally friendly , men/women Nina Kristene Heels Elegant and solemnMen/Women Freewaters Nikki Stud Sandals Popular recommendationman/woman DKNY ASTOR - Trainers Fine workmanship , Pro-Keds ROYAL PLUS - Trainers - off white , Hogan Sneakers - Men Hogan Sneakers online on YOOX United Kingdom - 11516863GPAntony Morato Boots - Men Antony Morato Boots online on YOOX United Kingdom - 11506213HAGhōud Venice Sneakers - Men Ghōud Venice Sneakers online on YOOX United Kingdom - 11497739BF , Reebok Sneakers - Women Reebok Sneakers online on YOOX United Kingdom - 11109528VQ , Espadrilles Sandals - Women Espadrilles Sandals online on YOOX United Kingdom - 11424944WK , Fabi Court - Women Fabi Courts online on YOOX United Kingdom - 11518820GG , 2Star Sneakers - Women 2Star Sneakers online on YOOX United Kingdom - 11551792HH , Sara Sandals - Women Sara Sandals online on YOOX United Kingdom - 11499731PWMaxbianco Ankle Boot - Women Maxbianco Ankle Boots online on YOOX United Kingdom - 11502304NBGioseppo Flip Flops - Women Gioseppo Flip Flops online on YOOX United Kingdom - 11575813HNAquazzura Ankle Boot - Women Aquazzura Ankle Boots online on YOOX United Kingdom - 11491173JFWOMEN Prada Blue Platforms Fair price , KeHbZNsi Merrell Zoe Sojourn Leather Q2 , Known for its excellent quality Old Gringo Bonnie 13" , SAS Captiva For lasting comfort that never goes out of style, slip into the SAS Captiva sandal. , women Stuart Weitzman Trail Mix Sandals High-quality materialsFendi Black Zucca Monogram Sneakers 37.5 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.