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.Gianna Meliani Ballet Flats - Women Gianna Meliani Ballet Flats online on YOOX United Kingdom - 11457643TE , Roger Vivier Ballet Flats - Women Roger Vivier Ballet Flats online on YOOX United Kingdom - 11465814RI , Dolce & Gabbana Loafers - Men Dolce & Gabbana Loafers online on YOOX United Kingdom - 11495180QK , Clarks Ellis Franklin - Boots - Men Clarks Boots online on YOOX United Kingdom - 11338463VN , Leather Crown Sneakers - Women Leather Crown Sneakers online on YOOX United Kingdom - 11460244HU , Ladies Black/White Goddess Platforms Bright colors , New Balance 247 Techy Mesh - Sneakers - Women New Balance Sneakers online on YOOX United Kingdom - 11466904NPShop ★ Art Sneakers - Women Shop ★ Art Sneakers online on YOOX United Kingdom - 11493038GL , lady Manolo Blahnik Multicolor Laurato Sandals Make full use of materialsWOMEN Elizabeth and James Black Sandals Elegant and solemnClub Monaco AKINYA - Sandals Colour: blackHomers KING - Slip-ons Colour: crosta sirena , Pieces PSDARIA - High-top trainers Colour: winetastingadidas Performance BARRICADE CLUB - Outdoor tennis shoes , men/women Sam Edelman Kavi Sneakers & Athletic Sam Edelman Various stylesMen/Women French Sole Tequila Flats Make full use of materials , Rodo Sandals - Women Rodo Sandals online on YOOX United Kingdom - 11454031IVJeannot Loafers - Women Jeannot Loafers online on YOOX United Kingdom - 11548318FHStuart Weitzman Sandals - Women Stuart Weitzman Sandals online on YOOX United Kingdom - 11522314BH , Pedro García Sandals - Women Pedro García Sandals online on YOOX United Kingdom - 11573511VDY-3 Ankle Boot - Women Y-3 Ankle Boots online on YOOX United Kingdom - 44472767XX , Burberry Regular Cndonqingua Sneakers (M, B)hhrxkJFy Salomon S/Lab Sense 7 SG , JJB0BBUs UNISA Jerad_ks SHOES FOR WOMENbusiness Marc Fisher Amazie 2O'Neill Ventura The O'Neill Ventura sandal are a must-have for the beachy, bohemian wardrobeChristian Louboutin Argile Green Gray Choca 55mm Suede Cross Strap Buckle Heel A971 Sandals , lady Melissa Red Patchuli Wedges Known for its excellent quality , woman Emma Hope Brown None Pumps Nice colorIsabel Marant Denim Balesi Wedge Sneaker 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.