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.Bruschi Ankle Boot - Women Bruschi Ankle Boots online on YOOX United Kingdom - 11486674SPMOBILS Patrizia LOW-TOP TRAINERS FOR WOMEN , Steve Madden Leopard Imitates Birkenstock SandalsCalifornia Casual Unisex Sneakers | Puma Black-Puma White | PUMA Lows | PUMA United States , Ladies Prada Black Women Oxford Platforms Known for its good qualityWOMENS Alexandre Birman Beige Unknown Wedges Fast delivery , CLARKS Tri Trail LOW-TOP TRAINERS FOR WOMEN , man/woman Not Rated Meson Heels Bright colors , Adidas Puma BASKET BOW - Slip-ons - white/winsome orchidMen/Women CL By Laundry Hazel Flats high quality , man/woman Splendid Debrah Clogs & Mules special promotionmens/womens Avec Les Filles Cora Sandals Reasonable pricemens/womens Marc Fisher Doreny 3 Heels Elegant shape , Church's Loafers - Men Church's Loafers online on YOOX United Kingdom - 11369266MHTod's Loafers - Men Tod's Loafers online on YOOX United Kingdom - 11298790DIDune London WIDE FIT WIDE FIT OLYVEA - Classic ankle boots Colour: greyNew Look Wide Fit WIDE FIT TEQUILA - Sandals Colour: dark yellowman/woman Scott Palani RC Sneakers & Athletic Scott Outstanding styleMally Loafers - Women Mally Loafers online on YOOX United Kingdom - 11526234RLKudetà Ballet Flats - Women Kudetà Ballet Flats online on YOOX United Kingdom - 11539938VXLeonardo Iachini Boots - Women Leonardo Iachini Boots online on YOOX United Kingdom - 11501378DESergio Rossi Court - Women Sergio Rossi Courts online on YOOX United Kingdom - 11547878WCAnya Hindmarch Sneakers - Women Anya Hindmarch Sneakers online on YOOX United Kingdom - 11508343OF , High-quality materials Jack Rogers ShelbyCordani Ravi You'll feel confident and chic wearing these fab Ravi platform wedge sandals by Cordani.Kork-Ease Mindo Freshen up your fall collection with the fine Kork-Ease Mindo booties , OluKai Holona Simple, clean, and honest - the OluKai Holona sandal is ready to navigate any water adventure! , Carrucci Mangione Make everyday attire look magnificent with the Carrucci Mangione brogue oxford , Buscemi Off White/Grey/Wine Womens 100mm Tassel All Accesories Sneakers , Chloé Tan Suede Foster Gladiator Wedge 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.