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.Isabella Zocchi Collezioni Court - Women Isabella Zocchi Collezioni Courts online on YOOX United Kingdom - 11128215UBGiorgio Picino Ankle Boot - Women Giorgio Picino Ankle Boots online on YOOX United Kingdom - 11522560AO , Norma J.Baker Court - Women Norma J.Baker Courts online on YOOX United Kingdom - 11461003DX , Avec Modération Sandals - Women Avec Modération Sandals online on YOOX United Kingdom - 11262968MK , Style & Co White Leather Slip On. No Buckle. SandalsCLARKS Cheshuntbe Gtx FASHION ANKLE BOOTS FOR WOMEN , WOMENS Candie's Hidden High-top Wedges Buy onlineLadies Ahnu Black Salena Sandals Online shopMen/Women Lauren Lorraine Nicole Boots sellSteve Madden PEIGI - MulesSKECHERS Work Soft Stride - ChathamDorothy Perkins SWAG UPDATE - High heeled sandals Colour: silver , men's/women's Kenneth Cole Reaction Cue Up Boots Special priceCaroll Boots - Women Caroll Boots online on YOOX United Kingdom - 11457992TIAdidas Paradox London Pink CHANNAH - High heels - champagneAdidas Superdry ZOE QUINN HIGH CHELSEA BOOT - Classic ankle boots - black metallic , Stokton Sneakers - Women Stokton Sneakers online on YOOX United Kingdom - 11437727OC , Jeannot Loafers - Women Jeannot Loafers online on YOOX United Kingdom - 44812101QKD.A.T.E. Sneakers - Women D.A.T.E. Sneakers online on YOOX United Kingdom - 11518316JS , Manas Ankle Boot - Women Manas Ankle Boots online on YOOX United Kingdom - 11525032RR , O Jour Court - Women O Jour Courts online on YOOX United Kingdom - 11000704FQ , Rodo Flip Flops - Women Rodo Flip Flops online on YOOX United Kingdom - 11351845KEMatisse Black Mint Green Colorblock SandalsbGIACHmW SKECHERS 14148_bbk SLIP-ON PARA MUJER , aztHGFU3 ECCO 12550350865 TRAINERS FOR WOMENxin8OrR5 SKECHERS 11977-ltpk ZAPATILLA CON PLATAFORMAComplete specification range Romika Cassie 12adidas White Rose Gold 3d Metal Toe Cap Superstar Sneakers , Givenchy Black Classic Logo Rubber Pool Slide 41 Sandalslady BCBGMAXAZRIA Tan Gladiator Sandals Order welcome
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.