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.Chie Mihara Xiro - Sandals - Women Chie Mihara Sandals online on YOOX United Kingdom - 11430033FAMm6 Maison Margiela Boots - Women Mm6 Maison Margiela Boots online on YOOX United Kingdom - 11235468AHAncient Greek Sandals X Lalaounis Sandals - Women Ancient Greek Sandals X Lalaounis Sandals online on YOOX United Kingdom - 11526754KL , Tipe E Tacchi Ankle Boot - Women Tipe E Tacchi Ankle Boots online on YOOX United Kingdom - 11533046OTManila Grace Denim Ankle Boot - Women Manila Grace Denim Ankle Boots online on YOOX United Kingdom - 11553964VL , Tory Burch Royal Tan Fleming 100mm Leather Espadrille Sandals , IBIZA BEACH 704 Marino WEDGE-HEEL ESPADRILLES FOR WOMENSKECHERS Breathe Easy - Take On AnythingWomen's BCBGeneration Bcbg Platforms a great varietyDune London MORTIMER - High heeled sandals , men's/women's Ted Baker Lorca 3 Boots Beautiful , Men/Women XOXO Ganelo Sandals Very good classification , Stonefly OVER - Ankle boots Colour: black , Tommy Jeans Skate shoes Colour: rot/wei?/blaumen's/women's VIONIC Maddox Sneakers & Athletic VIONIC Outstanding styleFilippa K LARA MULE - Heeled mules Colour: black , Men/Women Tommy Hilfiger Pharis Boat Tommy Hilfiger businessHenderson Loafers - Men Henderson Loafers online on YOOX United Kingdom - 11492416GGH by Hudson | H By Hudson Axminster formal shoes in wine leather , men/women New Balance Sonic V1 Sneakers & Athletic New Balance retail pricemen's/women's Roberto Cavalli Moccasins Colour: black renewed on timemen's/women's LAUREN Ralph Lauren Betha II Heels leading the fashion , Adidas Dune London WIDE FIT WIDE FIT DIXEY - High heels - brownVans Sneakers - Women Vans Sneakers online on YOOX United Kingdom - 11484191FQ , a variety of Lilly Pulitzer Willa Sandal , Lush design Dirty Laundry Rosario SmoothDiverse new design Danner Springfield 4.5"At a lower price Stacy Adams Kason , Nike Women's Orange Juvenate Sneakers Style/Color: 724979-604 SneakersLADY Birkenstock Red Gizeh Sandals Pleasant appearance ,
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.