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.Plein Sud Ankle Boot - Women Plein Sud Ankle Boots online on YOOX United Kingdom - 11476203LV , Ovye' By Cristina Lucchi Sandals - Women Ovye' By Cristina Lucchi Sandals online on YOOX United Kingdom - 11449703JMJOHN SMITH Cinca W 14i Turquesa LOW-TOP TRAINERS FOR WOMEN , Ladies Predictions Silver Wedges a wide range of products , WOMENS Børn Gold Zeeka Wedges Nice and charming , Italian Shoemakers Beige Summertime Slip On Sandalsmen/women Franco Sarto Fitz Heels low costadidas Originals SWIFT RUN - Trainers , men/women CHAPS Odella Heels Elegant styleLost Ink TANYA PERSPEX INSERT SLINGBACK - High heelsReebok Classic FREESTYLE HI NBK - High-top trainers , Adidas Lacoste REY - Trainers - whiteHogan Loafers - Women Hogan Loafers online on YOOX United Kingdom - 11299012IWMunich Sneakers - Men Munich Sneakers online on YOOX United Kingdom - 11446620SK , Thompson Loafers - Men Thompson Loafers online on YOOX United Kingdom - 11541906NQ , Alberto Guardiani Boots - Men Alberto Guardiani Boots online on YOOX United Kingdom - 11550025GKCesare Paciotti Loafers - Men Cesare Paciotti Loafers online on YOOX United Kingdom - 11504976QBLeather Crown Sneakers - Men Leather Crown Sneakers online on YOOX United Kingdom - 11384815EM , Lagoa Espadrilles - Women Lagoa Espadrilles online on YOOX United Kingdom - 11165767HP , Replay Sneakers - Women Replay Sneakers online on YOOX United Kingdom - 11493387EC , Santoni Sandals - Women Santoni Sandals online on YOOX United Kingdom - 11540531BI , Casadei Ankle Boot - Women Casadei Ankle Boots online on YOOX United Kingdom - 11507908MB , Jil Sander Sneakers - Women Jil Sander Sneakers online on YOOX United Kingdom - 11520853QEKPAU8TSx Jerusalem Sandals Jesse - MensModern technology Ted Baker Eliahn , Tempur-Pedic Arlow Lounge around in plush comfort with the supportive Tempur-Pedic Arlow slipperGiuseppe Zanotti Gray Leather with Chrome Hardware 40 Sneakers , Zara Pink New Box Metallic Strap Heel Evening Sandals , lady Banana Republic Olive Julie Sandals Various current designsManolo Blahnik Off White Raffia Flower Slide 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.