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.Valentino Garavani Ankle Boot - Women Valentino Garavani Ankle Boots online on YOOX United Kingdom - 11518924FOmen/women Newton Running Distance Elite Sneakers & Athletic Newton Running High quality and low overheadGiampaolo Viozzi Sandals - Women Giampaolo Viozzi Sandals online on YOOX United Kingdom - 11495602WF , King Avanti Legends Pack Sneakers | Puma Black-Vibrant OrangeDr. Martens Work Rapid Steel Toe 6-Tie BootXTI 47530 C Camel FASHION FOOTWEAR FOR WOMENWOMEN Tory Burch Beige 41148390 Sandals Modern technology , woman Acne Studios Black Fera Sandals Low costs , adidas White with Black Stripes Superstar Sneakersmen's/women's Dolce Vita Loida Boots Clearance price , Adidas KIOMI Classic heels - nude , men/women Bella-Vita Danica Heels Moderate cost , ECCO Soft 7 High Top TieOptima leather trainers , pack of white + pink, Mjusmen's/women's Walking Cradles Stella Heels Used in durabilityCamper Sneakers - Men Camper Sneakers online on YOOX United Kingdom - 11366663SMman/woman El Naturalista Nectar N5141 Boots Easy to clean surface , John Varvatos Sneakers - Men John Varvatos Sneakers online on YOOX United Kingdom - 11535825PORoberto Botticelli Sneakers - Men Roberto Botticelli Sneakers online on YOOX United Kingdom - 11554276CXGaimo Sandals - Women Gaimo Sandals online on YOOX United Kingdom - 11479283CR , Bruschi Loafers - Women Bruschi Loafers online on YOOX United Kingdom - 11483725SWLemaré Loafers - Women Lemaré Loafers online on YOOX United Kingdom - 11256352TM , Lumberjack Loafers - Women Lumberjack Loafers online on YOOX United Kingdom - 11505558CDPrezioso Sandals - Women Prezioso Sandals online on YOOX United Kingdom - 11456105FSBruschi Ankle Boot - Women Bruschi Ankle Boots online on YOOX United Kingdom - 11485833PU , Fratelli Rossetti Sandals - Women Fratelli Rossetti Sandals online on YOOX United Kingdom - 11440668QRGerman Outlets Tundra Boots Petra Wide , WOMENS Balenciaga Tan/Brown Snake Skin Sandals Crazy Price, Birmingham , Giuseppe Zanotti Clear Black Metallicwoodgrain Marrone 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.