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.Andrea Morelli Ankle Boot - Women Andrea Morelli Ankle Boots online on YOOX United Kingdom - 11485262KI , 0-105 Zero Cent Cinq Sneakers - Women 0-105 Zero Cent Cinq Sneakers online on YOOX United Kingdom - 11335157DI , Moa Master Of Arts Sneakers - Men Moa Master Of Arts Sneakers online on YOOX United Kingdom - 11581830FE , womens Fendi 39 Euro Sandals Let our products go out into the worldmen/women Tommy Hilfiger Lari Boots Cheap order , men's/women's VIONIC Larrun Loafers Great varietymen/women Splendid Flaire Heels Elegant shape , Men/Women Crocs Patricia Sandals special promotionZign High heeled ankle bootsNew Look Wide Fit WIDE FIT FAITH - SandalsMen/Women Zign Cowboy/Biker boots Colour: nero Elegant shape , men/women Church's Kelsey Suede Sandal Heels Diverse new design , man/woman Schutz Lale Clogs & Mules British temperament , Hogan Sneakers - Women Hogan Sneakers online on YOOX United Kingdom - 11568148KT , Lumberjack Loafers - Men Lumberjack Loafers online on YOOX United Kingdom - 11441636LC , Dsquared2 Sneakers - Men Dsquared2 Sneakers online on YOOX United Kingdom - 11246248WD , Malìparmi Court - Women Malìparmi Courts online on YOOX United Kingdom - 11546077IFRodo Sandals - Women Rodo Sandals online on YOOX United Kingdom - 11571995RD , Silvano Sassetti Loafers - Women Silvano Sassetti Loafers online on YOOX United Kingdom - 11457985QL , Sergio Rossi Sandals - Women Sergio Rossi Sandals online on YOOX United Kingdom - 11411727XW , Vicini Tapeet Sandals - Women Vicini Tapeet Sandals online on YOOX United Kingdom - 11380590HUSergio Rossi Court - Women Sergio Rossi Courts online on YOOX United Kingdom - 11432136BF , Dolce&Gabbana Black Dolce & Gabbana Sneakers , Miu Miu Pink Platform Thong SandalsNike Women's Air Max Thea Premium Red + White Style/Color: 616723-600 SneakersEileen Fisher Silver New Spree Leather/ Rubber Sport Flat Sandalswomen Donna Karan Black Platform Sandals Louis, in detail , LADY Kenneth Cole Black Night Platforms special purchaselady Miu Miu Red 1233 Sandals quality Queen , Adrianna Papell Silver Cassidy T-strap 720 Sandals ,
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.