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.Passion Blanche Ankle Boot - Women Passion Blanche Ankle Boots online on YOOX United Kingdom - 11217439SK , Janet & Janet Loafers - Women Janet & Janet Loafers online on YOOX United Kingdom - 11506076HSElvio Zanon Ankle Boot - Women Elvio Zanon Ankle Boots online on YOOX United Kingdom - 11567394GPLogan Crossing Sneakers - Women Logan Crossing Sneakers online on YOOX United Kingdom - 11532190WXOlivia's Bow Sneakers - Women Olivia's Bow Sneakers online on YOOX United Kingdom - 11491463RR , ladies Burberry Pink Sandals Let our products go out into the worldLACOSTE 35caj0024 Straightset 21g Wht LOW-TOP TRAINERS FOR WOMEN , LADY Prada Navy Blue 3x5861 Sandals Elegant shapeManolo Blahnik Gold Metallic Leather Buckle SandalsDel Toro High Top Laser Cut Chukka Sneaker , mens/womens Adidas Duramo Slides Schuhe Reliable performance , Pier One Ankle strap ballet pumps , men/women River Island Espadrilles Colour: black real , Tommy Hilfiger MAXIMILIAN - Trainers - blackAsh Sneakers - Women Ash Sneakers online on YOOX United Kingdom - 11221557NG , Men/Women Kenneth Cole New York Stacy Heels Ranked first in its class , Men/Women Marc Jacobs Aurora Pompom Mule Heels High quality and low overhead , Gusto Ankle Boot - Women Gusto Ankle Boots online on YOOX United Kingdom - 11285987GH , Giuseppe Zanotti Sneakers - Women Giuseppe Zanotti Sneakers online on YOOX United Kingdom - 11208820WD , Gianvito Rossi Court - Women Gianvito Rossi Courts online on YOOX United Kingdom - 11459839ODSam Edelman Sandals - Women Sam Edelman Sandals online on YOOX United Kingdom - 11342484EVCarlo Pazolini Court - Women Carlo Pazolini Courts online on YOOX United Kingdom - 11084618WSAxel Arigato Beige Clean 90 SneakersWomen's Baldinini Silver Sandals Nice colorTrendy Keds Anchor Metallic LinenFine wild Stacy Adams Neville , LifeStride Monaco The LifeStride Monaco sandal is understated elegance that will make heads turn!SAS Cate The covet-worthy Cate brings a feminine and sophisticated lookVaneli Saimi Sensible and sleek, the Saimi flat from Vaneli sets the mood for a stylish and laird back week , Florsheim Danforth The quality made Danforth driving moc from Florsheim will be a great addition to any casual wardrobe
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.