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.Tosca Blu Shoes Sandals - Women Tosca Blu Shoes Sandals online on YOOX United Kingdom - 11508964ISladies ALDO Metallic Gold Sandals Modern and elegant fashionWOMEN Steve Madden Beige Formal Shoes Great classification , MISS Mystique Boutique Gold/Multi 3907 Sandals Reasonable priceVera Wang Cobalt Blue Simply "Axiom" Sandals , ladies Lilly Pulitzer Tan Mckim Sandals Uniquemen's/women's Badgley Mischka Fonda Heels New stylemen's/women's Nine West Laird Heels main categoryMen/Women Hunter Original Flip-Flop Sandals Outstanding featuresSwing leather brogues , black, PataugasZumba Zumba? Flex II Remix HighAdidas Buffalo TAFFY - High heels - black , Jeffrey Campbell FYORA - High heeled boots Colour: purple , Etnies | Etnies Jameson vulc sneaker in gray , Hogan Sandals - Women Hogan Sandals online on YOOX United Kingdom - 11220662IVArfango Loafers - Men Arfango Loafers online on YOOX United Kingdom - 11524988BN , Lerews Boots - Men Lerews Boots online on YOOX United Kingdom - 11314135BOMen/Women Nike Air Max Infuriate 2 Sneakers & Athletic Nike Fine workmanship , mens/womens Saucony Grid Escape TR3 Sneakers & Athletic Saucony Elegant appearance , Mizuno Sneakers - Women Mizuno Sneakers online on YOOX United Kingdom - 11528267DK , Ebarrito Loafers - Women Ebarrito Loafers online on YOOX United Kingdom - 11552360HO , Emanuel Ungaro Sneakers - Women Emanuel Ungaro Sneakers online on YOOX United Kingdom - 11067395KF , Sobborgo Ankle Boot - Women Sobborgo Ankle Boots online on YOOX United Kingdom - 11531849QX , Palm Angels Sandals - Women Palm Angels Sandals online on YOOX United Kingdom - 11238983OL , Online Camper Hoops - K200298Giuseppe Zanotti Black New Women Patent Leather & Logo Metal Plaque Sneakers Eu 37 Sneakerswomens Pedro Garcia White Samanta Sandals Win highly appreciated , Roberto Del Carlo Tan Brown Leather SandalsLadies Mystique Boutique Tan Sandals Quality first , Women's Giuseppe Zanotti Beige Sandals Exquisite workmanship ,
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.