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.Manila Grace Denim Boots - Women Manila Grace Denim Boots online on YOOX United Kingdom - 11521221WCVittorio Virgili Flip Flops - Women Vittorio Virgili Flip Flops online on YOOX United Kingdom - 11427067AB , Dolce & Gabbana Sandals - Women Dolce & Gabbana Sandals online on YOOX United Kingdom - 11159987VV , GBBRAVO 3806 PLATFORM SANDALS FOR WOMENMarc By Marc Jacobs Sneakers - Women Marc By Marc Jacobs Sneakers online on YOOX United Kingdom - 11194092OHART 468 FASHION ANKLE BOOTS FOR WOMEN , womens Valentino Black Heels Platforms Different styles , womens Pale Lavendar Sawed Sandals Latest technologyladies Miu Miu Baltico Sandals Latest technologymen's/women's Vince Camuto Kolema Heels best sellerAir max invigor trainers , grey, Nike , Kennel & Schmenger Kenda Fringe Platform SandalAdidas J.CREW ISLAND - Espadrilles - red ivory , man/woman Diadora N9000 USA Sneakers & Athletic Diadora Beautiful , Kenneth Cole New York LEX - Sandals Colour: black , men's/women's ara Ruffina Clogs & Mules Sufficient supply , Pantanetti Boots - Men Pantanetti Boots online on YOOX United Kingdom - 11488304EH , Salewa MS MTN TRAINER - Walking shoes - black out/bergotmen's/women's Reebok Furylite Slip-On Jersey Sneakers & Athletic Reebok luxurious , man/woman Blue by Betsey Johnson Elsa Heels leading the fashion , Alberto Guardiani Sneakers - Men Alberto Guardiani Sneakers online on YOOX United Kingdom - 11267761PM , Diadora Sneakers - Women Diadora Sneakers online on YOOX United Kingdom - 11497404BB , Bryan Blake Boots - Women Bryan Blake Boots online on YOOX United Kingdom - 11495714AE , Tory Burch Espadrilles - Women Tory Burch Espadrilles online on YOOX United Kingdom - 11209818JO , Antonio Marras Sandals - Women Antonio Marras Sandals online on YOOX United Kingdom - 11465948IVGivenchy Open-Toe Mules - Women Givenchy Open-Toe Mules online on YOOX United Kingdom - 11327545PMCALIFERS Ja5832y20-azul Blanco Rojo Tommy Mujer Piel Ja5832y20-azul Blanco Rojo Tommy FASHION SANDALS FOR WOMEN , women Vince Platform Suede Sneakers Sneakers Sale online storelady Ecco Black Jales Plain Wedges special offerlady Salvatore Ferragamo Multi-color Shoes-2977 Sneakers Professional design ,
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.