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.Elvio Zanon Ankle Boot - Women Elvio Zanon Ankle Boots online on YOOX United Kingdom - 11455872RL , SKECHERS 12735 LOW-TOP TRAINERS FOR WOMEN , Steve Madden Nude and Clear Sandals , WOMEN Orange & White Sandals UniqueCathy Jean Brown Tan By Leopard Print Tennis Sneakers , Easy Spirit Black Leather M (Usa) Good Condition SandalsBalmain Black Cameron Mesh Pull-on Sneakers Sneakers , Donald J. Pliner Gold Wedge Slides SandalsMISS Zara Slingback Formal Shoes Great classification , Men/Women SAS Funk Loafers Medium cost , Nike Sportswear AIR MAX 95 SE - Trainers Colour: white/black , Men/Women Stuart Weitzman Lowlight Heels New varieties are launchedLes Tropéziennes par M Belarbi TAHINE - Sandalsmen/women Donald J Pliner Edwyn Loafers Good quality , Daroca w1u leather ankle boots , brown, PikolinosTod's Loafers - Men Tod's Loafers online on YOOX United Kingdom - 11411712ITBikkembergs Sneakers - Men Bikkembergs Sneakers online on YOOX United Kingdom - 11332049KQ , Adidas Rapisardi KIMMIE BOOTIE - Classic ankle boots - navy , mens/womens Vince Camuto Shelbin 3 Heels Has a long reputationLe Bohémien Boots - Men Le Bohémien Boots online on YOOX United Kingdom - 11485249BKPhilippe Model Sneakers - Men Philippe Model Sneakers online on YOOX United Kingdom - 11462069JSVirtus Palestre Sneakers - Men Virtus Palestre Sneakers online on YOOX United Kingdom - 11215290AR , mens/womens Chinese Laundry Spring Street Boots Let our goods go to the worldFornarina Ankle Boot - Women Fornarina Ankle Boots online on YOOX United Kingdom - 11476703WI , Zoe Ankle Boot - Women Zoe Ankle Boots online on YOOX United Kingdom - 11501800IJ , Geneve Ankle Boot - Women Geneve Ankle Boots online on YOOX United Kingdom - 11307596BQ , Loriblu Ankle Boot - Women Loriblu Ankle Boots online on YOOX United Kingdom - 11311985RGMedium cost Donald J Pliner ElenNew style Eric Michael Myrawoman Maison Margiela Brown Shoes-2369 Sandals quality Queen ,
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.