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.Dolce & Gabbana Sneakers - Women Dolce & Gabbana Sneakers online on YOOX United Kingdom - 11474922UQ , Le Stelle Court - Women Le Stelle Courts online on YOOX United Kingdom - 11333595EELaura Bellariva Loafers - Women Laura Bellariva Loafers online on YOOX United Kingdom - 11491772NIBibi Lou Loafers - Women Bibi Lou Loafers online on YOOX United Kingdom - 11522458EALiu •Jo Sneakers - Men Liu •Jo Sneakers online on YOOX United Kingdom - 11363405QCL' Autre Chose Ankle Boot - Women L' Autre Chose Ankle Boots online on YOOX United Kingdom - 11487333XOAdidas Lost Ink Wide Fit WIDE FIT BUCKLE DETAIL LONG BOOT - High heeled boots - black , JOHN SMITH Reso Jr 15v Blanco-rosa TRAINERS FOR WOMENLadies Fendi Multicolor Monster Sandals Cheaper than the priceLADY Aquazzura Tan Karlie Wedges Popular tide shoeswomens Fendi Black Item 579177 Sneakers New design , Matisse Matisse x Amuse Society - Rock MuseBianca Di Classic ankle boots Colour: red , Billi Bi Ankle boots Colour: black varese , Cole Haan Pinch Grand Penny Loafer , Teva Original Universal Premier - Leather , Lacoste | Lacoste Lerond BL 2 sneakers in black canvasAdidas CTWLK AZIZA - Sandals - cucro , Pantanetti Loafers - Men Pantanetti Loafers online on YOOX United Kingdom - 11580684MLmens/womens Gabor Winter boots Colour: wallaby the most convenientVivienne Westwood Sneakers - Men Vivienne Westwood Sneakers online on YOOX United Kingdom - 11517425KC , Meazzo Court - Women Meazzo Courts online on YOOX United Kingdom - 11481830EU , Ash Boots - Women Ash Boots online on YOOX United Kingdom - 11547402PA , Lefabian Sandals - Women Lefabian Sandals online on YOOX United Kingdom - 11557952SDHogan Rebel Court - Women Hogan Rebel Courts online on YOOX United Kingdom - 11045046DM , Giancarlo Paoli Sandals - Women Giancarlo Paoli Sandals online on YOOX United Kingdom - 11336829CJ , Pierre Darré Sneakers - Women Pierre Darré Sneakers online on YOOX United Kingdom - 11435184NQ , ara Kelly Go all natural with the sophisticated Kelly from ara , WOMENS Furla Magnolia Carmen Sandals Crazy Price, BirminghamGolden Goose Deluxe Brand White Francy 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.