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.Zoe Ankle Boot - Women Zoe Ankle Boots online on YOOX United Kingdom - 11498517GDWhite Style Name: Yetaway: 887711692249 Sandalsnvi0EJWp mens/womens Baretraps Melany Flats cheapestMTNG 90180 C5531 Rustico Cuero FASHION BOOTS FOR WOMENWOMENS Steve Madden Dejavu Platforms Online export businessWOMENS Prada Pink/Taupe Sandals Elegant and robust packaging , PUMA Puma x Han KJØBENHAVN Suede Sneaker , Florsheim Draft Moc Toe Woven Vamp Driver , woman Burberry Black Espadilla Wedges price concessionsWomen's Valentino Metallic Rockstud Leather Sandals durabilityConverse Chuck Taylor? All Star? Rubber OxKanna MAURA - Slip-ons Colour: sebino , SKECHERS Relaxed Fit?: Velmen - Erever , Dorothy Perkins Wide Fit WIDE FIT SABRINA - Sandals , Men/Women Frye Riley Trek Boots Diversified new designSantoni Sneakers - Men Santoni Sneakers online on YOOX United Kingdom - 11319468XNPrimabase Sneakers - Men Primabase Sneakers online on YOOX United Kingdom - 11451664NU , Nike Sneakers - Men Nike Sneakers online on YOOX United Kingdom - 11363953JSHogan Sneakers - Men Hogan Sneakers online on YOOX United Kingdom - 11559399TV , Leather ankle boots with fringed detail , taupe, La Redoute Collections , adidas Originals | adidas Originals Deerupt Sneakers In White And Lilac , Giuseppe Zanotti Loafers - Men Giuseppe Zanotti Loafers online on YOOX United Kingdom - 11394798EFValleverde Sandals - Women Valleverde Sandals online on YOOX United Kingdom - 11553575NIAvril Gau Sandals - Women Avril Gau Sandals online on YOOX United Kingdom - 11559904PV , Guglielmo Rotta Loafers - Women Guglielmo Rotta Loafers online on YOOX United Kingdom - 11502981CM , Clocharme Ankle Boot - Women Clocharme Ankle Boots online on YOOX United Kingdom - 11399714FM , woman Fendi Nude Wedges German OutletsVarious goods SeaVees Sunset Strip Sneaker , Valentino Black Noir Rockstud Studded Leather T Strap Strappy Kitten Heels Sandals , lady Buscemi Acqua Marina 100mm Sneakers Characteristic
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.