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.Diane Von Furstenberg Espadrilles - Women Diane Von Furstenberg Espadrilles online on YOOX United Kingdom - 11284237OFDolce & Gabbana Espadrilles - Women Dolce & Gabbana Espadrilles online on YOOX United Kingdom - 11255715SA , Dolce & Gabbana Espadrilles - Men Dolce & Gabbana Espadrilles online on YOOX United Kingdom - 11524055EO , Visconti & Du Réau Sandals - Women Visconti & Du Réau Sandals online on YOOX United Kingdom - 11390704GCMoa Master Of Arts Sneakers - Men Moa Master Of Arts Sneakers online on YOOX United Kingdom - 11205829MAWOMEN JustFab Blue Espadrille Wedges Hot salewomens J.Crew Sandals Elegant and robust menu , men's/women's Tommy Hilfiger Sunday Heels classic style , River Island Platform sandals Colour: blueadidas Originals Campus Stitch & Turn , Havaianas LUNA PRINT - Pool shoes Colour: ballet roseLanvin Sneakers - Women Lanvin Sneakers online on YOOX United Kingdom - 11492873TP , Suicoke Sandals - Men Suicoke Sandals online on YOOX United Kingdom - 11361524IT , Y-3 Sneakers - Men Y-3 Sneakers online on YOOX United Kingdom - 11132616VXVersace Loafers - Men Versace Loafers online on YOOX United Kingdom - 11461234FQ , Lumberjack Sneakers - Men Lumberjack Sneakers online on YOOX United Kingdom - 11577173JW , men/women Sam Edelman Damian Oxfords Contrary to the same paragraph , Men/Women Badgley Mischka Bennet Heels Every item described is availableman/woman Calvin Klein Marco Boots Known for its beautiful quality , man/woman Cycleur de Luxe Crossover Sneakers & Athletic Cycleur de Luxe Settlement Price , Unisa Boots - Women Unisa Boots online on YOOX United Kingdom - 11503090JLElisa Mey® Sandals - Women Elisa Mey® Sandals online on YOOX United Kingdom - 11558935WRChristian Louboutin Light Green Slingback Sandals , EFay0UYJ Reebok Work All Terrain Work , cheap price Jewel Badgley Mischka Antonette , Christian Louboutin Orange Madmonica Resort Spike Espadrilles #a518 SandalsTory Burch Honey Wedge Reva Rubber Flip Flops Sandals , WOMENS BCBGeneration Tapis Canvas Metal Wedges Louis, in detail , lady Burberry House Check Tennis Sneakers Reliable performanceDiane von Furstenberg Black Multi Palermo Sandals ,
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.