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.Tua By Braccialini Loafers - Women Tua By Braccialini Loafers online on YOOX United Kingdom - 11528938CB , Valentino Garavani Flip Flops - Women Valentino Garavani Flip Flops online on YOOX United Kingdom - 11448170GM , mens/womens adidas Originals Superstar Sneakers & Athletic adidas Originals a good reputation in the worldLADY Style & Co Sandals Clever and practicalStuart Weitzman Berry Suede Tiegirl Bingo Sandals , LADY Nina Silver Fenton Wedges Nice appearanceman/woman Taos Footwear Tradition Heels special functionmens/womens Giuseppe Zanotti E870014 Boots Preferential pricemen/women Eric Michael Lara Heels Special price , Pepe Jeans TINKER PRO-BOLD - Trainersmen/women 1.STATE Amilee Boots Order welcomeman/woman ara Kaya Heels Online Shopping , Kenneth Cole New York Design 10795Adidas LEMON JELLY DEVON - Wellies - blackTod's Loafers - Women Tod's Loafers online on YOOX United Kingdom - 11542763FLL4k3 Sneakers - Men L4k3 Sneakers online on YOOX United Kingdom - 11527592OTadidas Performance TERREX SWIFT R2 - Trail running shoes - coren black , Prada Loafers - Women Prada Loafers online on YOOX United Kingdom - 11479589GRKöe Ankle Boot - Women Köe Ankle Boots online on YOOX United Kingdom - 11550556DACeline Ankle Boot - Women Celine Ankle Boots online on YOOX United Kingdom - 11469132PL , Carlo Pazolini Court - Women Carlo Pazolini Courts online on YOOX United Kingdom - 11084618WS , Blu Byblos Sneakers - Women Blu Byblos Sneakers online on YOOX United Kingdom - 11494560CKBB0URyCW ladies Ash Brown Sneakers newcomerSpecial purchase Sperry Rey LTTMISS Steve Madden Gold Senzz Wedges A balance between toughness and hardness , Christian Louboutin Red Scalopump 85 Fraise Suede Pointed Heel 38 PumpsLADY adidas Tan Swift Run Sneakers High quality and low effortWOMENS Marc Fisher Brown Queenie Platforms Sale ItalyChristian Louboutin Multi-glitter Rantus Orlato Flat SneakersPrada Black Leather & Logo Wedge Sandals
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.