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.Mariano Di Vaio Sneakers - Men Mariano Di Vaio Sneakers online on YOOX United Kingdom - 11580170SQ , Luca Valentini Court - Women Luca Valentini Courts online on YOOX United Kingdom - 11537157GCMerrell Bare Access Flex Knit Woolwomen Furla Brown Pumps Elegant appearancehWnPEX5s Leather trainers , beige, Nike , mWcAR9ve man/woman Ariat Derby Boots wholesaleChie By Chie Mihara Bebe - Court - Women Chie By Chie Mihara Courts online on YOOX United Kingdom - 11429523JE , New Balance 420 Womens Printed Lining - Sneakers - Women New Balance Sneakers online on YOOX United Kingdom - 11089253RB , Nila & Nila Court - Women Nila & Nila Courts online on YOOX United Kingdom - 11473855LXLOIS 83858 107 Marino LOW-TOP TRAINERS FOR WOMEN , mens/womens Ivanka Trump Klover 3 Heels use , mens/womens Superga 2730 - Espadrilles Reliable performance , man/woman Dolce Vita Tory Sandals Has a long reputationmen's/women's Hush Puppies Hayes PT Oxford Oxfords Reliable performanceMen/Women Schutz Jovita Clogs & Mules Recommended today , Asics Sneakers - Men Asics Sneakers online on YOOX United Kingdom - 11483899LN , men/women Gordon Rush Kinsley Oxfords Known for its excellent qualitySelected Homme Loafers - Men Selected Homme Loafers online on YOOX United Kingdom - 11248991PXAntony Morato Sneakers - Men Antony Morato Sneakers online on YOOX United Kingdom - 11548894ADAlaïa Sandals - Women Alaïa Sandals online on YOOX United Kingdom - 11184526FC , Preventi Ankle Boot - Women Preventi Ankle Boots online on YOOX United Kingdom - 11159105KQDsquared2 Ankle Boot - Women Dsquared2 Ankle Boots online on YOOX United Kingdom - 11481240JK , Joseph Ankle Boot - Women Joseph Ankle Boots online on YOOX United Kingdom - 11538943GL , Emporio Armani Sneakers - Women Emporio Armani Sneakers online on YOOX United Kingdom - 11579831HALumberjack Ankle Boot - Women Lumberjack Ankle Boots online on YOOX United Kingdom - 11577163BL , Brand feast Irish Setter Drifter 02814Customer first English Laundry Verona , womens Chinese Laundry Orange Sandals Wedges New products in 2370 , lady Miu Miu Brown Sandals Wedges International choicewoman Cole Haan Orange Wedges Average costs
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.