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.Dolce & Gabbana Sandals - Women Dolce & Gabbana Sandals online on YOOX United Kingdom - 11182276HMMariano Di Vaio Sneakers - Men Mariano Di Vaio Sneakers online on YOOX United Kingdom - 11488095JB , Cafènoir Ankle Boot - Women Cafènoir Ankle Boots online on YOOX United Kingdom - 11497518LNBelstaff Ankle Boot - Women Belstaff Ankle Boots online on YOOX United Kingdom - 11503161DWFerrari Future Cat OG Trainers | White-Black-Rosso Corsa , Ovye' By Cristina Lucchi Sandals - Women Ovye' By Cristina Lucchi Sandals online on YOOX United Kingdom - 11569103VJYOKONO Gales 021 Plata FASHION SANDALS FOR WOMENMISS GX by Gwen Stefani Wedges Excellent features , Tory Burch Printed Cut Out Wedge Flip-Flop , Donald J. Pliner Gold Wedge Slides SandalsHUGO HYBRID RUNN - Trainers Colour: blackmen's/women's ASH Bahia Heels High-quality materialsmens/womens Mustang Trainers - dunkelblau Shoes Crazy price , Adidas Wallis ANYA - Ankle boots - black , Pavement ALICE LONG - Winter boots Colour: black , men/women Scarpa Kailash GTX Lady Boots Popular recommendation , Men/Women Sam Edelman Paris Clogs & Mules TrendyNew Balance MS574 - Trainers - pigment , Scarpa NEUTRON - Trail running shoes Colour: atollDoucal's Loafers - Men Doucal's Loafers online on YOOX United Kingdom - 11512067UO , Adidas Tommy Hilfiger BASIC HIKING HEELED - Classic ankle boots - black , Armani Jeans Boots - Men Armani Jeans Boots online on YOOX United Kingdom - 44851876VQ , Diesel Sneakers - Women Diesel Sneakers online on YOOX United Kingdom - 11535471MQHécos Ankle Boot - Women Hécos Ankle Boots online on YOOX United Kingdom - 11521982TDUnisa Ballet Flats - Women Unisa Ballet Flats online on YOOX United Kingdom - 11484856DF , Leather Crown Sneakers - Women Leather Crown Sneakers online on YOOX United Kingdom - 11564099RHPhilippe Model Sneakers - Men Philippe Model Sneakers online on YOOX United Kingdom - 11516799LXY69NWLn1 Dr. Scholl's Work Kimberly IISeasonal hot sale Levi's Shoes Rocklin CoreSpecial purchase Vans SK8-Mid Reissue
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.