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.Griff Italia Ballet Flats - Women Griff Italia Ballet Flats online on YOOX United Kingdom - 11542219LF , Hundred 100 Ankle Boot - Women Hundred 100 Ankle Boots online on YOOX United Kingdom - 11516526TT , Gianfranco Lattanzi Ankle Boot - Women Gianfranco Lattanzi Ankle Boots online on YOOX United Kingdom - 11228758PB , The Seller Sandals - Women The Seller Sandals online on YOOX United Kingdom - 11503100AMDolfie Ankle Boot - Women Dolfie Ankle Boots online on YOOX United Kingdom - 11529064II , PORRONET 2417 SANDALIA BIO PARA MUJERLADY ALDO Black/Brown Sandal Wedges diversity , woman Hogan Sneakers Big clearance sale , y1bBo6KU men's/women's Vince Tyra Boots cheapIrregular Choice STAGE LEFT Gold , Manifattura National Ankle Boot - Women Manifattura National Ankle Boots online on YOOX United Kingdom - 11474443OA , VEXED Zapato Vexed De Piel Taupe 3658 ZAPATO CONFORT DE MUJERladies SODA Brown Leather Used Wedges Crazy Price, BirminghamWOMEN Zara Green Sandals Formal Shoes Excellent qualityMISS Georgina Goodman Black/Fuschia Leon Platforms New product , WOMENS Christian Louboutin Python Pump Platforms Low priceLadies KATHRYN AMBERLEIGH Dark Yellow Wedges Wholesale , mens/womens Patricia Green Elise Heels Modern design , Tod's Boots - Men Tod's Boots online on YOOX United Kingdom - 11541254MT , men/women Teva Freewheel Washed Canvas Sneakers & Athletic Teva King of quantity , mens/womens ara Becky Heels We have won praise from our customers.Adidas HUGO UPTOWN BOOTIE - Classic ankle boots - black , Adidas Peter Kaiser PERIGON - High heeled boots - notte , mens/womens PARFOIS T-bar sandals Colour: camel Year-end special promotionsGianni Marra Court - Women Gianni Marra Courts online on YOOX United Kingdom - 11438256PL , Immediate delivery Sanuk Nice Bootah LXDansko Patti Get outdoors and go hard with the supportive outdoor Patti slip-onLadies Kenneth Cole Reaction White Sneakers High qualitywoman Manolo Blahnik Blac Sandals Various current designs , WOMEN Clarks Black Sandal Wedges Online sales
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.