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.Islo Isabella Lorusso Sneakers - Women Islo Isabella Lorusso Sneakers online on YOOX United Kingdom - 11416286IFwoman J.Crew Gold Sandals Customer firstWOMENS Vince Camuto Sandals Exquisite workmanship , Antonio De Luca Court - Women Antonio De Luca Courts online on YOOX United Kingdom - 11523510UA , CLARKS Vendra Dune ZAPATO DE CU?A PARA MUJER , Ladies Tory Burch Black/Gold Sally Wedges Fashion pattern , men's/women's J/Slides Edge Sandals Online export storeSardenha wellington boots , black, Lemon Jellymen/women Lucky Brand Keezan Boots discount , man/woman Chinese Laundry Sitara Heels for you to choose , Aku BELLAMONT II GTX - Hiking shoes Colour: beige/orangeSelected Boots - Men Selected Boots online on YOOX United Kingdom - 11468753AIPrimabase Sneakers - Men Primabase Sneakers online on YOOX United Kingdom - 11451954VUmen/women JL by Judith Leiber Francesca Heels Complete specification range , mens/womens L'Artiste by Spring Step Sandi Boots Complete specification rangeman/woman PUMA Tsugi Mi Disc Han Sneakers & Athletic PUMA Various types and stylesAsfvlt Sneakers - Women Asfvlt Sneakers online on YOOX United Kingdom - 11506885DJVans Sneakers - Women Vans Sneakers online on YOOX United Kingdom - 11492455MMCafènoir Court - Women Cafènoir Courts online on YOOX United Kingdom - 44661064JR , Keys Sneakers - Women Keys Sneakers online on YOOX United Kingdom - 11554269NJ , Dkny Sneakers - Women Dkny Sneakers online on YOOX United Kingdom - 11561930QSPavin Ankle Boot - Women Pavin Ankle Boots online on YOOX United Kingdom - 11482983CHStrategia Ankle Boot - Women Strategia Ankle Boots online on YOOX United Kingdom - 11475263KT , Elisabetta Franchi Court - Women Elisabetta Franchi Courts online on YOOX United Kingdom - 11290853BEWalter Steiger Sandals - Women Walter Steiger Sandals online on YOOX United Kingdom - 11496820KXJoshua*S Open-Toe Mules - Women Joshua*S Open-Toe Mules online on YOOX United Kingdom - 11484268LR , O0fpLw1g DESCANFLEX 30710 SHOES FOR WOMENFamous store Massimo Matteo Venetian DriverVarious styles Eileen Fisher LytonLadies Valentino Black Leather (141635) Pumps quality ,
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.