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.Flavio Creation Ankle Boot - Women Flavio Creation Ankle Boots online on YOOX United Kingdom - 11553036QL , Tory Burch Ankle Boot - Women Tory Burch Ankle Boots online on YOOX United Kingdom - 11203661PVSchutz Ankle Boot - Women Schutz Ankle Boots online on YOOX United Kingdom - 11462861VDGiancarlo Paoli Loafers - Women Giancarlo Paoli Loafers online on YOOX United Kingdom - 11474644MEwomen Anne Klein Unknown Wedges new entry , gH6lDaUh man/woman Adidas Sobakov Schuhe AmoyAsh ALEX BIS Silver / BeigeLadies Tory Burch Black Majorca Platforms Louis, in detailTory Burch Red Currant-magnolia Thandie Wedge Currarnt Sandals , LADY Sergio Rossi Multi-color 87 Platforms official websiteGiuseppe Zanotti Silver Sparkle Strappy Heels SandalsWOMEN Givenchy White/Black Multi Sneakers Popular recommendationmen's/women's Nina Patience Heels Suitable for colorman/woman VIONIC Posey Flats British temperamentFalto suede trainers , black, Redskins , men/women CL By Laundry Golden Girl Flats Superb craftsmanship , Adidas Be Natural Classic ankle boots - cognacEmporio Armani ACTION - Trainers - black , Kennel + Schmenger TOP - Trainers Colour: silber/schwarzSantoni Loafers - Men Santoni Loafers online on YOOX United Kingdom - 11157044RTadidas Performance ALPHABOUNCE BEYOND - Neutral running shoes - carbon/grey three/core black , Archivio,22 Sneakers - Women Archivio,22 Sneakers online on YOOX United Kingdom - 11462179PWTiffi Sandals - Women Tiffi Sandals online on YOOX United Kingdom - 11495592NMHigh Boots - Women High Boots online on YOOX United Kingdom - 11498299MQ , Giuseppe Zanotti Sneakers - Women Giuseppe Zanotti Sneakers online on YOOX United Kingdom - 11509335OQMy Heels Sneakers - Women My Heels Sneakers online on YOOX United Kingdom - 11530509AF , pv0VSQ1Q Columbia Bugaboot Plus IV Omni-HeatNike Women's Air Max Thea Jacquard Sneakers Style/Color: 718646-005 Sneakers , WOMEN Prada Navy Calzatute Donna Platforms Elegant and robust packagingLADY Missoni Multicolor Pumps Platforms Rich design ,
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.