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.Elia Maurizi Ankle Boot - Women Elia Maurizi Ankle Boots online on YOOX United Kingdom - 11552296CQShoe The Bear Boots - Men Shoe The Bear Boots online on YOOX United Kingdom - 11580638TJFabrizio Chini Loafers - Women Fabrizio Chini Loafers online on YOOX United Kingdom - 11334836TURIVIERABONUCCI Sandalias Plataforma Mujer Piel Ja419h68-multicolor WEDGE-HEEL SANDALS FOR WOMENBurberry Nova Check Leather Raffia Wedge Brown Eu 38 Sandalswomens Stuart Weitzman Naked Rw86701 Wedges Reliable reputation , CLARKS Medora Grace BOTíN PLANO DE MUJERPITILLOS 1211 ZAPATO DE CU?A PARA MUJER , mens/womens SKECHERS Rumblers-Hope Float Heels Fast deliveryMen/Women Matisse Jester Heels Famous store , Ml574ese trainers , black, New BalanceAdidas Minelli Sandals - marine , Losers Sneakers - Men Losers Sneakers online on YOOX United Kingdom - 11580525LH , Losers Sneakers - Men Losers Sneakers online on YOOX United Kingdom - 11580522QX , Mammut ULTIMATE PRO LOW GTX MEN - Hiking shoes Colour: black , men's/women's ASH Spin Sneakers & Athletic ASH Online export storeRodo Sneakers - Women Rodo Sneakers online on YOOX United Kingdom - 11465302IC , Cult Ankle Boot - Women Cult Ankle Boots online on YOOX United Kingdom - 11477498TSPhilippe Model Sneakers - Women Philippe Model Sneakers online on YOOX United Kingdom - 11452303ERLove Moschino Sneakers - Women Love Moschino Sneakers online on YOOX United Kingdom - 11488908AX , Robert Clergerie Sandals - Women Robert Clergerie Sandals online on YOOX United Kingdom - 11560506DU , Moma Ankle Boot - Women Moma Ankle Boots online on YOOX United Kingdom - 11516672DLLoretta Pettinari Sneakers - Women Loretta Pettinari Sneakers online on YOOX United Kingdom - 11493757ETLouis, elaborate Sof Sole AIRR Insole , Outstanding function Rockport Dustyn Waterproof Chukka , Every item described is available Corral Boots A1197adidas X Yeezy Blush 500 Mens Boost Desert Rat Suede Mesh Kanye Low Sneakers SneakersSalvatore Ferragamo Multicolor Signature Gold Monogarm Omega High Top Sneaker Men's D Sneakerslady Saint Laurent Red Ostrich Platforms International choiceLADY Giuseppe Zanotti Black 1684new Sneakers uppers
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.