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.Under Armour UA Tac Zip 2.0 , SIXTYSEVEN S044478843brf PLATFORM SANDALS FOR WOMEN , SKECHERS 15316_nvy SANDALIA PLANA DE MUJER , DORKING S042607213bre LOW-TOP TRAINERS FOR WOMEN3.1 Phillip Lim Ankle Boot - Women 3.1 Phillip Lim Ankle Boots online on YOOX United Kingdom - 11559303HUwomens Givenchy Red Rubber Slide Sandals luxuryladies Bare Traps Mandy Sandals Most economicalman/woman Giorgio Brutini Vapor Oxfords Comfortable feeling , Hi-Tec Ox Belmont Mid I Waterproofmen's/women's Dirty Laundry DL Kiss Me Heels Many styles , Clarks OAKLAND - Trainers - dark brown , Dsquared2 Loafers - Men Dsquared2 Loafers online on YOOX United Kingdom - 11428794EUSupra Sneakers - Men Supra Sneakers online on YOOX United Kingdom - 11481495VS , Reebok Sneakers - Men Reebok Sneakers online on YOOX United Kingdom - 11362894UPSantoni Sneakers - Men Santoni Sneakers online on YOOX United Kingdom - 11478592UA , Tod's Sneakers - Men Tod's Sneakers online on YOOX United Kingdom - 11371965BT , Gaelle leather toe post sandals , indigo blue, Les Tropeziennes Par M.BelarbiPantofola d`Oro SUPERLEGGERA - Moulded stud football boots - white , Frankie Morello Sneakers - Men Frankie Morello Sneakers online on YOOX United Kingdom - 11447680BWNike Performance AIR MAX SEQUENT 3 PRM - Neutral running shoes Colour: rust pink , Fendi Boots - Women Fendi Boots online on YOOX United Kingdom - 11394412VH , Maria Cristina Boots - Women Maria Cristina Boots online on YOOX United Kingdom - 11523560DXwomen Dior Black Antica Sandals quality , Excellent workmanship Dr. Martens Voss FluffyHigh-quality Asolo Magnum GV MM , Lowa Rocket The Lowa Rocket is a lightweight, streamlined climbing shoe ideal for boulderingBalenciaga Black/Grape Triple S Nylon Mesh Suede and Leather Sneakers Sneakers , lady Tory Burch Brown Phoebe Sandals Nice and charmingladies Fendi Tan Brown Sandals Wedges Beautiful design , woman Jimmy Choo Black Cut-out Wedges packaging diversity ,
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.