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.Claudia By Isaberi Sandals - Women Claudia By Isaberi Sandals online on YOOX United Kingdom - 11441260EN , FLUCHOS F-0079 FASHION LOAFERS FOR WOMENLADY Balenciaga Camel Sandals Wedges Really , Tommy Jeans Tommy Jeans Light Leather Mid - Sneakers - Women Tommy Jeans Sneakers online on YOOX United Kingdom - 11539742VONew Balance 574 Fresh Foam Pigskin - Sneakers - Men New Balance Sneakers online on YOOX United Kingdom - 11104606MNDiadora Heritage Equipe Check - Sneakers - Men Diadora Heritage Sneakers online on YOOX United Kingdom - 11107731RWSimone Rocha Ballet Flats - Women Simone Rocha Ballet Flats online on YOOX United Kingdom - 11226646PT , Black Men's Huron Mesh Moc High Top Leather Sneaker Sneakers , WOMENS Tory Burch Ivory Wedge Sandals High quality and cheap , womens Guess Beige Gwbravado Wedges Famous storeWOMEN Jimmy Choo Off White Platforms luxuryWl574fla trainers , white/blue, New Balance , Bianco SPORTY - High-top trainers - army greenSoftclox FARA - High heeled ankle boots Colour: schwarz , Les Tropéziennes par M Belarbi MILLY - MulesBrador Sneakers - Men Brador Sneakers online on YOOX United Kingdom - 11474618BHNike Sneakers - Men Nike Sneakers online on YOOX United Kingdom - 11234757WP , Eleventy Boots - Men Eleventy Boots online on YOOX United Kingdom - 11467197GBSantoni Loafers - Men Santoni Loafers online on YOOX United Kingdom - 11410806SOman/woman Jack Rogers Bennett Etched Sneakers & Athletic Jack Rogers Authentic guarantee , Adidas Dune London MOIRA - High heeled sandals - blueGaudì Sandals - Women Gaudì Sandals online on YOOX United Kingdom - 11359583CBSoher Sandals - Women Soher Sandals online on YOOX United Kingdom - 11460546UP , Nr Rapisardi Sneakers - Women Nr Rapisardi Sneakers online on YOOX United Kingdom - 11504874RU , c2YlnBra BENINI A6111 SHOES FOR WOMENlady Prada Black Free Shipping Sandals Win the praise of customersWOMEN Salvatore Ferragamo Red Leather Sandals Many varieties , Tory Burch Sand - 251 90008600 SandalsBirkenstock Black Madrid Eva Ultra Light SandalsLadies ALAÏA Multi-color Sandal Platforms retail price ,
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.