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.Bruno Premi Ankle Boot - Women Bruno Premi Ankle Boots online on YOOX United Kingdom - 11515273BR , What For Ankle Boot - Women What For Ankle Boots online on YOOX United Kingdom - 11518969UWCHACAL 4446-chacal BOTíN PLANO DE MUJER , Calvin Klein White Patent Leather Cut Out Heels Sandals , lady Nicholas Kirkwood Black Sandra Sandals special purchaseLadies Manolo Blahnik Burgundy Bottino Sandals Special Price , MARTINELLI 13801316u-martinelli ZAPATOS DE VESTIR PARA HOMBRE , woman Céline Sneakers High quality and economyAdidas Gabor Classic heels - camino , mens/womens Sam Edelman Luisa Sandals Clearance , Men/Women Tory Burch Loretta 115mm Platform Heels Superb craftsmanshipArtselab Sneakers - Men Artselab Sneakers online on YOOX United Kingdom - 11564751MJHecon Boots - Men Hecon Boots online on YOOX United Kingdom - 11551023XW , Tod's Loafers - Men Tod's Loafers online on YOOX United Kingdom - 11568252TX , Under Armour Sneakers - Men Under Armour Sneakers online on YOOX United Kingdom - 11540769CH , Dogma Sneakers - Women Dogma Sneakers online on YOOX United Kingdom - 11238188HFFauvel Sandals - Women Fauvel Sandals online on YOOX United Kingdom - 11537383TUJfk Sandals - Women Jfk Sandals online on YOOX United Kingdom - 44773335GR , Ash Sandals - Women Ash Sandals online on YOOX United Kingdom - 11033990UH , Blauer Sneakers - Women Blauer Sneakers online on YOOX United Kingdom - 11554227VE , Cafènoir Court - Women Cafènoir Courts online on YOOX United Kingdom - 11439793II , Stelle Monelle® Boots - Women Stelle Monelle® Boots online on YOOX United Kingdom - 11516070OL , Manila Grace Sandals - Women Manila Grace Sandals online on YOOX United Kingdom - 44942634OK , Tory Burch Black Miller Kitten Sandals , XYQ8R0IE Teva Arrowood Riva Mid WPK07JFqTD BRUNATE 31274 SHOES FOR WOMENMoschino Beige Cheap and Chic Dark Suede Leather Sandals , Nike Air Max 1 - Skull Pack Sneakers , Christian Louboutin Citron Louis Flat Python SneakersMISS BCBGMAXAZRIA Peach Platforms Attractive and durable ,
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.