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.Paloma Barceló Ankle Boot - Women Paloma Barceló Ankle Boots online on YOOX United Kingdom - 11516573MGLA STRADA 968000 SHOES FOR WOMENwomens Fendi Logo Platforms Price reduction , BRUNO PREMI R5500x-bruno Premi PLATFORM SANDALS FOR WOMENCUMBIA 30157 Taupe WEDGE-HEEL SANDALS FOR WOMENWOMEN Liliana 139 Ron White Wedges qualitywomens Sperry Sahara Tan Sneakers quality Queen , mens/womens Clarks Vanek Walk Oxfords Consumer firstmens/womens Easy Spirit Chatt Heels useCopenhagen Platform boots Colour: dark blueBirkenstock BOSTON - Slippers - asphalt blackONLY SHOES ONLSKYE STUDS - TrainersBikkembergs Sneakers - Men Bikkembergs Sneakers online on YOOX United Kingdom - 11451027RDHogan Sneakers - Men Hogan Sneakers online on YOOX United Kingdom - 11560104KLDsquared2 Sneakers - Men Dsquared2 Sneakers online on YOOX United Kingdom - 11554372BPAdidas Madden Girl ARCADE - Classic ankle boots - black parismens/womens Pier One T-bar sandals Full range of specifications , men/women PUMA Muse Echo Sneakers & Athletic PUMA Stylish and charming , Leather Crown Sneakers - Men Leather Crown Sneakers online on YOOX United Kingdom - 11263467VX , John Galliano Sneakers - Men John Galliano Sneakers online on YOOX United Kingdom - 11450446QPOm Sneakers - Women Om Sneakers online on YOOX United Kingdom - 11548996NB2Star Sneakers - Women 2Star Sneakers online on YOOX United Kingdom - 11453602GI , Guido Sgariglia Court - Women Guido Sgariglia Courts online on YOOX United Kingdom - 11550474XW , Moon Boot Boots - Women Moon Boot Boots online on YOOX United Kingdom - 11249526QHRas Ballet Flats - Women Ras Ballet Flats online on YOOX United Kingdom - 11446229HHStuart Weitzman Court - Women Stuart Weitzman Courts online on YOOX United Kingdom - 11397774BL , Complete specification range Hush Puppies Chardon Oxford , Make full use of materials ASICS GEL-Kenun Lyte2UCk0eFo MISS Blue Charged Sneakers promotionLadies Claudia Ciuti Nude Formal Shoes Authentic guarantee
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.