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.L' Autre Chose Sandals - Women L' Autre Chose Sandals online on YOOX United Kingdom - 11485001WBGvIIBiSs Men/Women Alegria Playa Sandals cheap , MISS Vince Camuto Tan “emore” Sandals Elegant and robust menu , Superga Alexa Chung - 2294 Cothookw SneakerIGI AND CO 21507 ZAPATILLA CON PLATAFORMA , Ladies Tory Burch Black Patent Sandals quality , mens/womens Spring Step Emma Heels Outstanding stylemens/womens Rockport Brynn T-Strap Heels New marketAdidas Tamaris Classic heels - jeans , mens/womens Matt Bernson Avedon Sandals TRUEConverse CHUCK TAYLOR ALL STAR - High-top trainers Colour: charcoal , men/women L'INTERVALLE PERLA - Sandals Consumer firstPony Sneakers - Men Pony Sneakers online on YOOX United Kingdom - 11485308QWmen's/women's Nine West Xameera Wrap Sandal Sandals Strong heat and heat resistancemen/women Not Rated Sloan Sneakers & Athletic Not Rated Cheap ordermen/women Nine West Vernell Heels a wide range of products , men/women Betsey Johnson Leah Flats a wide range of products , man/woman Steve Madden Croon Sneakers & Athletic Steve Madden luxurious , mens/womens SKECHERS Marauder Mershon Sneakers & Athletic SKECHERS Medium costDeimille Court - Women Deimille Courts online on YOOX United Kingdom - 11448880XTGiannico Sandals - Women Giannico Sandals online on YOOX United Kingdom - 11316812ET , Mizuno Sneakers - Women Mizuno Sneakers online on YOOX United Kingdom - 11546030WEBarleycorn Loafers - Women Barleycorn Loafers online on YOOX United Kingdom - 11478983EM , Liu ?Jo Court - Women Liu ?Jo Courts online on YOOX United Kingdom - 11500559KJ , Vagabond Shoemakers Sneakers - Women Vagabond Shoemakers Sneakers online on YOOX United Kingdom - 11366214GL , Tory Burch Court - Women Tory Burch Courts online on YOOX United Kingdom - 11575374UF , Diverse new design Stacy Adams Madison , Women's Cole Haan Cooper Sandals a good reputation in the world , WOMENS Classiques Entier Golden Formal Shoes Very good quality , lady Eileen Fisher Grey Sandals Wedges Various current designs
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.