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.Loretta Pettinari Sneakers - Women Loretta Pettinari Sneakers online on YOOX United Kingdom - 11493972TRLuciano Barachini Sandals - Women Luciano Barachini Sandals online on YOOX United Kingdom - 11131324JIFRANK 19220 FASHION SANDALS FOR WOMEN , Zara Silver With Buckle (3624) SandalsPUMA x BIG SEAN Suede Sneakers | Ash-Ash | PUMA PUMA x BIG SEAN | PUMA United States , Ash DRAGON Black / Glitter , Twin-Set Simona Barbieri Ankle Boot - Women Twin-Set Simona Barbieri Ankle Boots online on YOOX United Kingdom - 44926955JUVera Wang White Simply Style Name:svelly Sku: 400987277677 Sandalslady BCBGeneration Blac Morocco Platforms Moderate costsladies Versace Red Platforms Very good qualityBershka | Bershka flatform sneaker in whitemen's/women's Adrienne Vittadini Shaye Boots luxurious , K-Swiss | K-Swiss ST529 heritage chunky sole sneakers in whiteNike Sportswear PRESTO FLY SE - Trainers - black/white , men/women TOM TAILOR Mules Colour: jeans Lush designmens/womens Vidorreta Platform sandals Colour: beige Innovative designMen/Women Sam Edelman Farrow Flats King of the crowdAdidas Felmini FAME - High-top trainers - blackCafènoir Sneakers - Women Cafènoir Sneakers online on YOOX United Kingdom - 11478257SSmens/womens Tommy Hilfiger Lumidee 2 Sneakers & Athletic Tommy Hilfiger Reputation first , Men/Women Clear Weather The One-O-One Sneakers & Athletic Clear Weather Lightweight shoesmens/womens ZAC Zac Posen Lola Heels a wide range of productsman/woman Finn Comfort Prezzo Sneakers & Athletic Finn Comfort superior , Nike Sneakers - Women Nike Sneakers online on YOOX United Kingdom - 11246168LA , Vic Matiē Loafers - Women Vic Matiē Loafers online on YOOX United Kingdom - 11461325ME , Carla G. Court - Women Carla G. Courts online on YOOX United Kingdom - 11522960SJLadies Burberry Blac Wedges Order welcome , EZbGQlxg Salomon X Alp Spry GTXSperry Navy & Off White Top Siders Wedge SandalsLADY Tory Burch Blue Ruffle Sneakers Attractive fashion
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.