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.Twin-Set Simona Barbieri Court - Women Twin-Set Simona Barbieri Courts online on YOOX United Kingdom - 11142554UQ , Charlotte Olympia Ballet Flats - Women Charlotte Olympia Ballet Flats online on YOOX United Kingdom - 11544373TOSteve Madden Ankle Boot - Women Steve Madden Ankle Boots online on YOOX United Kingdom - 11442858FG , Lanciotti Dé Verzi Loafers - Men Lanciotti Dé Verzi Loafers online on YOOX United Kingdom - 11549842DGNIKE 749794-010 HIGH-TOP TRAINERS FOR MENNike White Af1 Ultra Force Sneakers , Women's Balmain Black Low-tops Sneakers bestsell , AVID Men's Sneakers | Shell Pink-Puma White | PUMA Men's Picks | PUMA United StatesFree People Bali Footbed - Sandals - Women Free People Sandals online on YOOX United Kingdom - 11502121ESIslo Isabella Lorusso Sneakers - Women Islo Isabella Lorusso Sneakers online on YOOX United Kingdom - 11485989QC , Lucy Choi London Court - Women Lucy Choi London Courts online on YOOX United Kingdom - 11475732WC , WOMEN Steve Madden Black Rhinestone Sandals price concessions , Giuseppe Zanotti Silver Sparkle Strappy Heels Sandals , men's/women's Eric Michael Brea Heels Good design , Men/Women L.K. Bennett Pippa Heels Moderate costmen/women Khombu Alexandra Boots Acknowledgement feedback , mens/womens Kenneth Cole Unlisted Bryce Monk Oxfords Authentic guaranteeAdidas Hobbs SELMA - Platform sandals - white , Vans Sneakers - Women Vans Sneakers online on YOOX United Kingdom - 11280739JVVidorreta Espadrilles - Women Vidorreta Espadrilles online on YOOX United Kingdom - 11395290BQ , Cavallini Ankle Boot - Women Cavallini Ankle Boots online on YOOX United Kingdom - 11454409HDAdidas Originals Sneakers - Women Adidas Originals Sneakers online on YOOX United Kingdom - 11486374CHAs of the latest model Havaianas Top Marvel Sandal , ladies Nike Black Running Sneakers Let our goods go out into the world , womens ALDO Red Stilettos Platforms High quality and economywomens Tory Burch Tan Logo Sandals Elegant shapeWOMEN Christian Louboutin Black Sixties Pumps Average costs , womens Chloé Camel Tassel Wedges Reliable qualitylady LifeStride Red/White Stripes Wedges Popular recommendation , lady Dsquared2 Black Ds2 Sneakers High security ,
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.