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.Liu ?Jo Shoes Sneakers - Women Liu ?Jo Shoes Sneakers online on YOOX United Kingdom - 11275362SUValentino Garavani Ballet Flats - Women Valentino Garavani Ballet Flats online on YOOX United Kingdom - 11204966BR , Wolverine 6" DuraShocks® SR Steel-Toe Boot , Nike Metcon 3 - Sneakers - Men Nike Sneakers online on YOOX United Kingdom - 11376668KK , lady Tory Burch Blue Golden Wedges Sale online storeBOBS from SKECHERS Pop Ups - Beach HeroRockport Cobb Hill Collection Cobb Hill Inglewood Hurache , mens/womens Jessica Simpson Caralin Sandals Settlement Priceman/woman Billabong Setting Free 2 Sandals Trendymens/womens PATRIZIA Starburst Heels First qualitySKECHERS Work Sure Track - Erathmens/womens Adidas Men's Deerupt Pride Shoes Schuhe Fast deliveryDoucal's Loafers - Men Doucal's Loafers online on YOOX United Kingdom - 11530489TDRaparo Boots - Men Raparo Boots online on YOOX United Kingdom - 44627787EI , Men/Women Nine West Olsen 3 Sneakers & Athletic Nine West Sales ItalyMerrell MOAB 2 MID GTX - Walking boots - navyCMP HADIR LIFESTYLE SHOE WP - Walking boots - antracite , Pinko Sneakers - Women Pinko Sneakers online on YOOX United Kingdom - 11547504MU , Deimille Court - Women Deimille Courts online on YOOX United Kingdom - 11522729VQTod's Loafers - Women Tod's Loafers online on YOOX United Kingdom - 11435742CIVeronique Branquinho Boots - Women Veronique Branquinho Boots online on YOOX United Kingdom - 11330771GPAlexander Mcqueen Court - Women Alexander Mcqueen Courts online on YOOX United Kingdom - 11466461GGPatrizia Pepe Sandals - Women Patrizia Pepe Sandals online on YOOX United Kingdom - 11522893KQ , Fitflop Flip Flops - Women Fitflop Flip Flops online on YOOX United Kingdom - 11575075JDRoberto Festa Court - Women Roberto Festa Courts online on YOOX United Kingdom - 11418164AP , Jimmy Choo Boots - Women Jimmy Choo Boots online on YOOX United Kingdom - 11473587MXryVvVCgx Hunter Original Refined Short GlossComfortable feeling adidas Outdoor Terrex Tivid , womens Marc by Marc Jacobs Sneakers Fast delivery , woman Manolo Blahnik Multicolor Emli Pumps Free
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.