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.Calvin Klein Collection Sneakers - Men Calvin Klein Collection Sneakers online on YOOX United Kingdom - 11540160GQDolce & Gabbana Sneakers - Men Dolce & Gabbana Sneakers online on YOOX United Kingdom - 11315910HA , Black Stan Smith Pony Hair Sneakers , adidas By Stella McCartney Red Sandals , WOMENS Christian Louboutin Elissamolla Flat Sandals At an affordable price , TOMMY HILFIGER Fw0fw02249 WEDGE-HEEL SANDALS FOR WOMEN , ARCHE Larshy WEDGE ANKLE BOOTS FOR WOMENmen's/women's Steven Santana-C Loafers Orders are welcomeAir max motion trainers , blue/pink, Nike , men's/women's Aquatalia Calista Boots special promotion , men/women L.K. Bennett Claudette Heels Complete specification rangemens/womens Donald J Pliner Dione Loafers best seller , Doucal's Boots - Men Doucal's Boots online on YOOX United Kingdom - 11101203QBChurch's Loafers - Men Church's Loafers online on YOOX United Kingdom - 11518204FG , Men/Women Massimo Dutti Boots Colour: black renewed on timeAlberto Guardiani Sneakers - Men Alberto Guardiani Sneakers online on YOOX United Kingdom - 11481082NB , Hogan Rebel Sneakers - Men Hogan Rebel Sneakers online on YOOX United Kingdom - 11218010CG , men/women Gold & Gravy Street Sneakers & Athletic Gold & Gravy Various latest designs , Schutz Sandals - Women Schutz Sandals online on YOOX United Kingdom - 11531952JA , Magrit Sandals - Women Magrit Sandals online on YOOX United Kingdom - 11566444XI , Fragiacomo Ankle Boot - Women Fragiacomo Ankle Boots online on YOOX United Kingdom - 11519602CG , Leonardo Iachini Boots - Women Leonardo Iachini Boots online on YOOX United Kingdom - 11502102OIPrada Sport Court - Women Prada Sport Courts online on YOOX United Kingdom - 11550413DW , womens L.A.M.B. Lamb Platforms Modern design , WOMENS Tory Burch Beige/White Amanda Wedges Strong heat and heat resistanceMISS Burberry Plaid Traditional Wedges At an affordable priceLadies Hermès Purple Lizard Oran Sandals Stylish and funnyTory Burch Grey and Brown Mixed-media Sneakers Sneakers , Tory Burch Black Zoey 50mm Wedge Sandalslady Birkenstock Tan Suede Sandals Qualified production
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.