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.Roda At The Beach Sneakers - Men Roda At The Beach Sneakers online on YOOX United Kingdom - 11560777XU , Tory Burch Red Terra Thong Primrose / Nantucket Sandals , woman Christian Louboutin Lady Peep Platforms Suitable for colorwoman Manolo Blahnik Umice003 Formal Shoes to buywomen Badgley Mischka Blush Zowie Sandals Perfect workmanshipWomen's Jimmy Choo Neutral Pumps environmentally friendly , man/woman Ivanka Trump Hela Heels online shopMen/Women Me Too Yolo Heels Modern technologymens/womens Steve Madden Lowman Oxfords Maintenance capability , Almayer lite trainers , light grey, Levi'sVienne heels with strap , silver-coloured, Dkodeman/woman Taos Footwear Marvey Flats High-qualityLowa TIBET GTX WXL - Climbing shoes Colour: sepia/schwarzmens/womens Diane von Furstenberg Leiden-4 Loafers Fast deliveryGlobe TILT - Skate shoes - blackPony Sneakers - Men Pony Sneakers online on YOOX United Kingdom - 11502538CP , Lanvin Sneakers - Men Lanvin Sneakers online on YOOX United Kingdom - 11041821JAmen's/women's Lacoste L.12.12 117 1 Sneakers & Athletic Lacoste Good market , Farrutx Sandals - Women Farrutx Sandals online on YOOX United Kingdom - 11185643VBBarracuda Sneakers - Women Barracuda Sneakers online on YOOX United Kingdom - 11360180JQ , Atiana Sandals - Women Atiana Sandals online on YOOX United Kingdom - 11401524RB , Cult Loafers - Women Cult Loafers online on YOOX United Kingdom - 11473363CFMarian Sandals - Women Marian Sandals online on YOOX United Kingdom - 11564143WFRebecca Minkoff Espadrilles - Women Rebecca Minkoff Espadrilles online on YOOX United Kingdom - 11492649MU , Giuseppe Zanotti Sneakers - Women Giuseppe Zanotti Sneakers online on YOOX United Kingdom - 11502355WA , retail price Chooka Nina Tall Boot , Optimal price SKECHERS Breathe-Easy - SymphonyPrada - Black Leather Sz: M Wedge SandalsLADY Jimmy Choo Multicolor Lola Platforms Excellent craftwomens adidas Solar Red Nmd Sneakers quality ,
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.