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.Fratelli Karida Ankle Boot - Women Fratelli Karida Ankle Boots online on YOOX United Kingdom - 11527869EK , Hundred 100 Ankle Boot - Women Hundred 100 Ankle Boots online on YOOX United Kingdom - 11516212NWVic Matiē Ankle Boot - Women Vic Matiē Ankle Boots online on YOOX United Kingdom - 11457559UCEredi Del Duca Loafers - Men Eredi Del Duca Loafers online on YOOX United Kingdom - 11559739EXBrawn's Ankle Boot - Women Brawn's Ankle Boots online on YOOX United Kingdom - 11411899MP , ECCO 12213301708 LOW-TOP TRAINERS FOR WOMENj6dFMuiS man/woman ALDO Gwulle Sandals High-qualityMARIA MARE 61189 C21044 Rustico Taupe FASHION FOOTWEAR FOR WOMENHANNIBAL LAGUNA Evita-hannibal FASHION LOAFERS FOR WOMEN , Nike Silver Air Max Thea Mettallic SneakersLowa RENEGADE GTX MID - Walking boots - schiefer/oliv , man/woman CARLOS by Carlos Santana Tamm Sandals Low priceONLY SHOES ONLSKYE FRILL - Trainers FromSpringa Sneakers - Men Springa Sneakers online on YOOX United Kingdom - 11457229JA , Colmar Sneakers - Men Colmar Sneakers online on YOOX United Kingdom - 11546494XC , Galliano Loafers - Men Galliano Loafers online on YOOX United Kingdom - 11336096PX , Hecon Sneakers - Men Hecon Sneakers online on YOOX United Kingdom - 11551325RH , man/woman ASICS Tiger Gel-Lyte MT Sneakers & Athletic ASICS Tiger Guarantee quality and quantity , Toni Pons Loafers - Women Toni Pons Loafers online on YOOX United Kingdom - 11520548DVRoberto Botticelli Court - Women Roberto Botticelli Courts online on YOOX United Kingdom - 11453518VDPedro García Wedge - Women Pedro García online on YOOX United Kingdom - 44500841WRvRLVJgLp A2 by Aerosoles Drive Back , 4AZTxJVT ECCO Soft 8 Street Low , Women's Naturalizer Snake Skin Formal Shoes Elegant and robust menu , WOMEN Tory Burch Black Sally-mestico Wedges quality productsladies Topshop Black/Red Chunky Pump Platforms New market , LADY Tory Burch Black Cassia Sandals Special functionlady Jimmy Choo Leopard Print Sandals Excellent performance , womens Ralph Lauren Cream Hazel Sandals Cheap idealLanvin Black / White Snake T-strap 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.