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.Ancient Greek Sandals Sandals - Women Ancient Greek Sandals Sandals online on YOOX United Kingdom - 11524472KDMaria Cristina Court - Women Maria Cristina Courts online on YOOX United Kingdom - 11462920KCEVA LOPEZ E501001-ng CLOGS FOR WOMENECCO 12208350075 LOW-TOP TRAINERS FOR WOMEN , SKECHERS S012112615bbk LOW-TOP TRAINERS FOR WOMENOvye' By Cristina Lucchi Espadrilles - Women Ovye' By Cristina Lucchi Espadrilles online on YOOX United Kingdom - 11565180USGolden Goose Deluxe Brand Lilac Classic Distressed Superstar Sneaker Sneakers , WOMEN Lilly Pulitzer Black . Sandals Big clearance sale , LADY Franco Sarto Silver Metallic Wedges Beautiful design , woman Joshua Sanders White 10078stw Sneakers Reliable performance , men/women Isola Ravenna Heels Fashion versatile shoes , Mint Velvet GINA - Espadrilles Colour: white , Fierce vr trainers , black, Puma , DC Shoes | DC Shoes Manteca Sneaker in RedQuattrobarradodici Sneakers - Men Quattrobarradodici Sneakers online on YOOX United Kingdom - 11573440NK , Joshua*S Sneakers - Men Joshua*S Sneakers online on YOOX United Kingdom - 11244174EHKARL LAGERFELD KAMINI HI SIGNATURE SLING BACK - High heeled sandals Colour: white/blackAdidas Lauren Ralph Lauren RAILROAD STRIPE JOLIE - Trainers - blue , Men/Women Steve Madden Eskape Sneakers & Athletic Steve Madden Order welcomemen's/women's Newton Running Motion V Sneakers & Athletic Newton Running New varieties are launchedMalìparmi Sandals - Women Malìparmi Sandals online on YOOX United Kingdom - 11393510XN , Tod's Sneakers - Women Tod's Sneakers online on YOOX United Kingdom - 11412721WN , Tory Burch Sandals - Women Tory Burch Sandals online on YOOX United Kingdom - 11142713BTAlexander Smith Sneakers - Women Alexander Smith Sneakers online on YOOX United Kingdom - 11526978HO , ipFgEX4T ECCO 12550358365 TRAINERS FOR WOMENWvSSggHV REFRESH 63838 C Taupe , Durable service Chooka Cora Mid BootLightweight shoes Frye Brea Huarache Slip-OnJimmy Choo Light Khaki Demi Metallic Snakeskin-print Suede Sneakers SneakersMISS Stuart Weitzman Brown Sandals Reliable quality
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.