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.Pedro García Flip Flops - Women Pedro García Flip Flops online on YOOX United Kingdom - 11171273VU , Nike Air Max 270 - Sneakers - Men Nike Sneakers online on YOOX United Kingdom - 11472136IROTAZUA 692091 SANDALIA PLANA DE MUJERVans SK8-Hi Estate / Blue / True / WhiteVEXED Botin Vexed De Piel Negro 3656 FASHION FOOTWEAR FOR WOMENwomens Stuart Weitzman Multicolor Backdraft Wedges selling pricelady Free People Brown Sandals For your choiceHouse of Hounds BAIN - Slip-ons Colour: navy , men's/women's Rocket Dog Dalena Boots Elegant stylemen's/women's Sbicca Daytrip Heels Easy to use , mens/womens Frye Weston Chelsea Boots Excellent performance , Adidas s.Oliver Ankle boots - blackNike SB BRUIN MAX VAPOR - Trainers - black/blackWalsh Sneakers - Men Walsh Sneakers online on YOOX United Kingdom - 11426422LQmens/womens Kristin Cavallari Capri Kid Patent Clogs & Mules Economical and practicalInk Loafers - Women Ink Loafers online on YOOX United Kingdom - 11473851LBJoshua*S Sneakers - Women Joshua*S Sneakers online on YOOX United Kingdom - 11499902VECafènoir Boots - Women Cafènoir Boots online on YOOX United Kingdom - 11478278IECasadei Sandals - Women Casadei Sandals online on YOOX United Kingdom - 11188370WF , P.A.R.O.S.H. Boots - Women P.A.R.O.S.H. Boots online on YOOX United Kingdom - 11488098FG , Unisa Court - Women Unisa Courts online on YOOX United Kingdom - 11484873DN , Ilario Morelli Court - Women Ilario Morelli Courts online on YOOX United Kingdom - 11437447GGCult Ankle Boot - Women Cult Ankle Boots online on YOOX United Kingdom - 11509052CA4U2Wh4TY WOMENS Givenchy Sandals Bright colorsCurrent shape Miz Mooz Allureretail price OluKai Hokua Meshadidas X Yeezy 350 V2 Core Black Red 2017 Bred Boost Low Sply Kanye West Sneakers , Tory Burch Red Currant Thandie Wedge Flip Flops - Magnolia 9 Sandals , Valentino Black Free Rockstud Spike Ankle Strap Heel Sandals , Women's Nike Grey 642199-004 Sneakers At an affordable price
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.