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.Tipe E Tacchi Sandals - Women Tipe E Tacchi Sandals online on YOOX United Kingdom - 11332492CXL' Autre Chose Sandals - Women L' Autre Chose Sandals online on YOOX United Kingdom - 11508212FQ , Adidas Originals Sneakers - Women Adidas Originals Sneakers online on YOOX United Kingdom - 11486370OLPaloma Barceló Boots - Women Paloma Barceló Boots online on YOOX United Kingdom - 11515871BOUnder Armour UA Charged Ultimate 3.0Nike Women's Air Max 90 Snakeskin Sneakers. Leather and Mesh Upper Fabric. Style/Color: 896497-301 SneakersGEztLC1J men's/women's Onex Pretti Heels BargainPOLIN ET MOI 111904 FASHION BOOTS FOR WOMENMen/Women Jambu Anita Water-Resistant Boots Fine wild , mens/womens Marc Fisher Jeremy Sandals Elegant style , Pier One Winter boots - nero/taupeSteve Madden FORBES - Trainers Colour: blackUnder Armour UA Micro G? Velocity RNmens/womens Vaneli Qamar Heels Current shapeAntony Morato Trainers Colour: dark army , Marc Fisher LTD Adria Espadrille Wedge , Adidas Gabor WIDE FIT - High-top trainers - brown , men/women Ryka Enhance 2 Sneakers & Athletic Ryka TRUEmen/women Tommy Hilfiger Garson Oxfords Cheaper than the pricemen's/women's SKECHERS Moogen - Lodrino Sneakers & Athletic SKECHERS Strong heat and heat resistancemen/women Diadora I.C 4000 NYL II Sneakers & Athletic Diadora Orders are welcomeVic Boots - Women Vic Boots online on YOOX United Kingdom - 11248171EAGuess Court - Women Guess Courts online on YOOX United Kingdom - 11467626ILRoger Vivier Court - Women Roger Vivier Courts online on YOOX United Kingdom - 44993605WPRodolphe Menudier Court - Women Rodolphe Menudier Courts online on YOOX United Kingdom - 11515408PL , Official website M&F Western DanielSAS Cozy Cozy up for the weekend in this relaxing sandal from SASGiuseppe Zanotti White Croc Embossed Leather Lorenz 40/10 Sneakers Sneakerswomen Vaneli Tan Brown Leather Sandals Diverse new designWomen's Céline Patent Purple Sneakers Sneakers Affordable
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.