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.Racine Carrée Sandals - Women Racine Carrée Sandals online on YOOX United Kingdom - 11351567DMUnder Armour UA Speedform Intake 2 , Saint-Honoré Paris Souliers Ballet Flats - Women Saint-Honoré Paris Souliers Ballet Flats online on YOOX United Kingdom - 11168802FL , WOMEN Jimmy Choo Pewter Sandals Various current designsLadies adidas Red Orange Sandals Special functionmen/women Etro Printed Sandal Heels discountFila STARK LOW - Sports shoes - forest nightAdidas Hunter PENNY LOAFER - Slip-ons - oxblood , men's/women's Maripé Slip-ons Colour: nero discount priceMen/Women Steve Madden Heaven-E Flats Orders are welcomeMen/Women Miz Mooz Martha Heels Tide shoes listBershka | Bershka flatform espadrille sneakers in pink , Reef J-BAY - T-bar sandals - camelNovesta Sneakers - Men Novesta Sneakers online on YOOX United Kingdom - 11523943DA , Dsquared2 Sneakers - Men Dsquared2 Sneakers online on YOOX United Kingdom - 11153390TTMen/Women Marc Fisher LTD Ulla Heels A balance between toughness and hardnessLenora Court - Women Lenora Courts online on YOOX United Kingdom - 11498786JOMelluso Court - Women Melluso Courts online on YOOX United Kingdom - 11538219RJ , Spaziomoda Court - Women Spaziomoda Courts online on YOOX United Kingdom - 11449272XB , Albano Sandals - Women Albano Sandals online on YOOX United Kingdom - 11399356RILoriblu Ankle Boot - Women Loriblu Ankle Boots online on YOOX United Kingdom - 11522583XFHtc Ankle Boot - Women Htc Ankle Boots online on YOOX United Kingdom - 11330584TBHogan Ankle Boot - Women Hogan Ankle Boots online on YOOX United Kingdom - 11442244OM , Saint Laurent Court - Women Saint Laurent Courts online on YOOX United Kingdom - 11455747MJ , Fratelli Rossetti Loafers - Women Fratelli Rossetti Loafers online on YOOX United Kingdom - 11548348FAStuart Weitzman Silver Less Nudist Sandals , Known for its excellent quality CC Corso Como Del , high quality product Spring Step Carlotta , WOMEN Stuart Weitzman Multicolor Platforms Latest technology , Miu Miu Blush Patent Leather Sneakers
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.