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.Sofia M. Flip Flops - Women Sofia M. Flip Flops online on YOOX United Kingdom - 11371907WP , Janet Sport Sandals - Women Janet Sport Sandals online on YOOX United Kingdom - 11152036HT , Ralph Lauren Black Slingbacks By SandalsMISS Cue Cloud Wedges Selected materialswomen Balenciaga Sneaker Strong heat and heat resistanceWOMENS Black Clog/Sandal Sandals Excellent valueTwin-Set Simona Barbieri Ankle Boot - Women Twin-Set Simona Barbieri Ankle Boots online on YOOX United Kingdom - 11321423DG , MARROQUI SANCHEZ Zapato Marroqu De Piel Beig SHOES FOR WOMEN , WRANGLER Wl171681 Jeena Taupe WEDGE-HEEL SANDALS FOR WOMEN , LADY Touch Ups 622 Stacy Sandals Bright colors , Men/Women Adidas Continental 80 Shoes Schuhe durablemen/women Schutz Saasha Lee Heels Reliable performanceman/woman Clarks Balta Ray Sandals Elegant styleDorothy Perkins CLOVER - Peeptoe heels , Adidas H?gl Trainers - darkgreyBurton Menswear London SKIPPER SLIP ON - EspadrillesPrimabase Sneakers - Men Primabase Sneakers online on YOOX United Kingdom - 11451955WA , Serafini Luxury Sneakers - Men Serafini Luxury Sneakers online on YOOX United Kingdom - 11568068NM , Sun 68 Sneakers - Men Sun 68 Sneakers online on YOOX United Kingdom - 11481265EVAlexander Mcqueen Sneakers - Men Alexander Mcqueen Sneakers online on YOOX United Kingdom - 11204824AG , Fornarina Sneakers - Women Fornarina Sneakers online on YOOX United Kingdom - 11330112UR , O.X.S. Sneakers - Women O.X.S. Sneakers online on YOOX United Kingdom - 11456633XMCalpierre Court - Women Calpierre Courts online on YOOX United Kingdom - 11407797DM , Garrice Court - Women Garrice Courts online on YOOX United Kingdom - 11418532JK , Janet Sport Court - Women Janet Sport Courts online on YOOX United Kingdom - 11531662VW , Sergio Rossi Sandals - Women Sergio Rossi Sandals online on YOOX United Kingdom - 11456257ERMagrit Ballet Flats - Women Magrit Ballet Flats online on YOOX United Kingdom - 11566407XI , The color is very eye-catching La Sportiva Miura VSJimmy Choo White Pence Patent Leather Thong Cork 36 SandalsFendi Black Brown White Mix Montone Nero+latte+brownie Sandals ,
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.