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.Osvaldo Rossi Ankle Boot - Women Osvaldo Rossi Ankle Boots online on YOOX United Kingdom - 11501937BW , Plein Sud Ankle Boot - Women Plein Sud Ankle Boots online on YOOX United Kingdom - 11476203LVGiuseppe Zanotti Ankle Boot - Women Giuseppe Zanotti Ankle Boots online on YOOX United Kingdom - 11544693VFConverse Limited Edition Auckland Racer - Sneakers - Women Converse Limited Edition Sneakers online on YOOX United Kingdom - 44933590DH , WOMENS Jean-Michel Cazabat Negro/Black Zesta Wedges Exquisite workmanship , WOMEN Jimmy Choo Denim Blupat. Wedges Order welcome , MISS Jimmy Choo Nude T-strap Sandals Good market , womens Enzo Angiolini Champagne Formal Shoes promotionHUF WORLD CUP GALAXY - Trainers Colour: white/navy , man/woman KIOMI Moccasins General product , man/woman Tahari Grant Boots Speed ??refund , ASICS FREQUENT TRAIL - Trail running shoes - black/carbon , Napapijri JAKOB - High-top trainers - dark grey/medium grey , Men/Women ALDO Gaudet Boots Known for its beautiful qualitymen's/women's Imagine Vince Camuto Michael Heels Wholesale trade , man/woman Franco Sarto Hampton Boots leading the fashion , Puma ONE 3 FG - Moulded stud football boots - blackSalomon EVASION 2 GTX - Hiking shoes - castor gray/black/chive , Buscemi Sneakers - Women Buscemi Sneakers online on YOOX United Kingdom - 11558098LKCavallini Court - Women Cavallini Courts online on YOOX United Kingdom - 11484005OW , The Seller Boots - Women The Seller Boots online on YOOX United Kingdom - 11508424EJFormentini Ankle Boot - Women Formentini Ankle Boots online on YOOX United Kingdom - 11479087HW , Leather Crown Sneakers - Women Leather Crown Sneakers online on YOOX United Kingdom - 11531915LBBZi6ETDU Marc Fisher LTD Emilie 2vZrj1bGL Kenneth Cole Reaction Screen Slide , Valentino Orange Rockstud City Strap Low Block Heel Sandals 36.5 Pumpslady Luxury Rebel Gray Dana Wedges High quality products , women Tory Burch Brown Wedges Modern and elegant fashionLadies Giuseppe Zanotti Bronze I50004 Sandals Various current designswomen Valentino Black Leather Platforms Immediate delivery ,
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.