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.Marc Ellis Ankle Boot - Women Marc Ellis Ankle Boots online on YOOX United Kingdom - 11536769LB , Twin-Set Simona Barbieri Court - Women Twin-Set Simona Barbieri Courts online on YOOX United Kingdom - 11317387RG , Puma Basket Platformglitter Wn's - Sneakers - Women Puma Sneakers online on YOOX United Kingdom - 11403502BP , Khrio' Ankle Boot - Women Khrio' Ankle Boots online on YOOX United Kingdom - 11475300PD , Isabel Marant Gold Wedge Sneaker Sneakers , Diadora Heritage By The Editor Sneakers - Men Diadora Heritage By The Editor Sneakers online on YOOX United Kingdom - 11173226FGJ|D Julie Dee Ankle Boot - Women J|D Julie Dee Ankle Boots online on YOOX United Kingdom - 11355490KUMarc By Marc Jacobs Sneakers - Women Marc By Marc Jacobs Sneakers online on YOOX United Kingdom - 11077062MK , Noiselle By Eh Ankle Boot - Women Noiselle By Eh Ankle Boots online on YOOX United Kingdom - 11509111BQ , WOMEN Guess Nude Formal Shoes Win the praise of customersMISS Nine West Gold/Blue Glam Sandals Guarantee quality and quantityWomen's Jeffrey Campbell Ambrose Known for its good qualityMISS Jeffrey Campbell Multicolor Wedges Cheap ideal , WOMENS Stuart Weitzman Purple/Wine Platforms Price reductionmen/women Comfortiva Amesbury Boots renewed on time , man/woman Indigo Rd. Kash Heels Rich designTen Points ALICE - Platform bootsmen/women Rockport Riley Boots buy onlineLevi's? NY RUNNER II - Trainers - dark khakiWally Walker Boots - Men Wally Walker Boots online on YOOX United Kingdom - 11356392ID , Loriblu Sandals - Women Loriblu Sandals online on YOOX United Kingdom - 11461186EV , Keb Ankle Boot - Women Keb Ankle Boots online on YOOX United Kingdom - 11505974JG , Maison Margiela Sandals - Women Maison Margiela Sandals online on YOOX United Kingdom - 11114099QGAquazzura Dark Mulberry Bonta Bootie Sneakersb9t3aPK4 DVS Shoe Company Militia SnowMezlan Avery With a sleek and modern design, the Mezlan Avery loafer will be sure to garner attentionLadies Christian Louboutin Metallic Gray Platforms Different styles , womens Max Mara Brown Leather Platforms Sale Italy , Ash Prune Bowie Wedge Sneaker Suede Sneakers , woman Fendi Tan Heel Platforms shopping online
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.