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.Racine Carrée Ankle Boot - Women Racine Carrée Ankle Boots online on YOOX United Kingdom - 11488657PV , Donna Più Sandals - Women Donna Più Sandals online on YOOX United Kingdom - 11464434RG , Women's Tahari White/Black Sandals Special Price4lCBSz1q Gazellan brogues , camel, Kickers , Nike Free Rn 2018 - Sneakers - Men Nike Sneakers online on YOOX United Kingdom - 11483078GL , Adidas Originals Superstar 80S - Sneakers - Men Adidas Originals Sneakers online on YOOX United Kingdom - 11432762PSwomens Tory Burch Nude Patent Sandals Very good qualityCLARKS Un Karely Hail WEDGE-HEEL SANDALS FOR WOMEN , EXE Vera-300 FASHION ANKLE BOOTS FOR WOMENConverse Chuck Taylor? All Star? Street Mid , men/women SKECHERS Vinyasa - River Wonder Sandals Online ShoppingAdidas Dune London TRAVISS - Boots - tanAlaïa Sandals - Women Alaïa Sandals online on YOOX United Kingdom - 11559684CW , Diemme Sneakers - Men Diemme Sneakers online on YOOX United Kingdom - 11537709OSMizuno Sneakers - Men Mizuno Sneakers online on YOOX United Kingdom - 11527937LO , Men/Women Touch Ups Celeste Heels a wide variety of goodsSara Sandals - Women Sara Sandals online on YOOX United Kingdom - 11435768WS , Ebarrito Boots - Women Ebarrito Boots online on YOOX United Kingdom - 11521169QP , Prezioso Court - Women Prezioso Courts online on YOOX United Kingdom - 11449917KTMiu Miu Sneakers - Women Miu Miu Sneakers online on YOOX United Kingdom - 11547298DINike Black Air Max 2015 SneakersCViYEoSO PUMA Puma Breaker Suede Concrete , NQinWHFy Levi's Shoes Buck CT Canvas , Popular tide shoes Lilly Pulitzer Mira Sandal , low cost Five Ten Anasazi LV , Talbots Pinks Green Bright & Fabric Kitten Heel Slide 1/2 B SandalsMiu Miu Black Leather Metal Cap Toe Sneaker Size37 Sneakers , adidas X Yeezy Butter Boost 350 V2 F36980 Sneakers , Salvatore Ferragamo Black Patent Leather Buckle Accent Pumps Sandalsladies Valentino Black Pvc (145906) Sandals Fine 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.