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.Dvs Shoe Company Sneakers - Men Dvs Shoe Company Sneakers online on YOOX United Kingdom - 11298209FH , Dolce & Gabbana Sneakers - Men Dolce & Gabbana Sneakers online on YOOX United Kingdom - 11219171NE , Keds Scout Chukka Splash Twill WaxWolverine Marauder Multishox? Waterproof Steel ToeCARMELA 65686 FASHION FOOTWEAR FOR WOMEN , WOMEN Nike Ace Sneakers retail priceLadies Cape Robbin Heidi-2 Heel Sandals The highest quality material , Steve Madden Ingy - Ankle Boot - Women Steve Madden Ankle Boots online on YOOX United Kingdom - 11567446WE , WOMENS Saint Laurent Softy Camo Platforms We have received praise from our customers. , Nike White New Women's Air Relentless 4 # 684042 102 Sneakers , MTNG 52653 Lodiz Taupe ZAPATO PLANO PARA MUJERTed Baker LUOCI - Trainers Colour: purple , Men/Women Tretorn Eve Sneakers & Athletic Tretorn German OutletsReebok Classic CLASSIC LEATHER WOVEN EMB - TrainersGiannico Court - Women Giannico Courts online on YOOX United Kingdom - 11215816GQAmbitious Boots - Men Ambitious Boots online on YOOX United Kingdom - 11566151DUFiore di Lucia Milano PRINCE - Heeled mules Colour: glitter zip peltro , Bruno Bordese Sneakers - Men Bruno Bordese Sneakers online on YOOX United Kingdom - 11482572DJMetisse Boots - Women Metisse Boots online on YOOX United Kingdom - 11459437EB , Calpierre Court - Women Calpierre Courts online on YOOX United Kingdom - 11459948AWSigerson Morrison Boots - Women Sigerson Morrison Boots online on YOOX United Kingdom - 11479693BA , Racine Carrée Sandals - Women Racine Carrée Sandals online on YOOX United Kingdom - 11332379BNWOMEN Prada Black Sport Slides Sandals Reasonable delivery and punctual delivery , WOMENS Charles Jourdan Silver Platforms a wide range of products , LADY Aquazzura Cayenne Heels Formal Shoes Elegant and solemn , MISS Stuart Weitzman Cream Sandals Wedges Elegant and solemn , women Fendi Burgundy Bnwt Sandals High quality and economylady Rene Caovilla Blue New Sneakers Good designJimmy Choo Nude Patent Leather Open Sandals , woman DKNY White Wedges Orders are welcome
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.