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.Sam Edelman Flip Flops - Women Sam Edelman Flip Flops online on YOOX United Kingdom - 11428680MHLella Baldi Court - Women Lella Baldi Courts online on YOOX United Kingdom - 11492048IDAlbano Ankle Boot - Women Albano Ankle Boots online on YOOX United Kingdom - 11494846EP , women Marchesa Black Grace Formal Shoes First class in his class , CORINA C6752 Camel FASHION FOOTWEAR FOR WOMEN , WOMEN Dollhouse Black Platforms Crazy Price, Birmingham , men's/women's Lucky Brand Ysabel Boots Special purchase , man/woman Bandolino Pieretta Boots renewed on timeBirkenstock BOSTON - Slippers - habanaMassimo Matteo Double Monk Perf Capmen/women Crocs Mammoth Flat Flats At a lower price , Adidas Veja V-10 - Trainers - snow natural/blackKenneth Cole New York MADDOX - High-top trainers , Men/Women MJUS Cowboy/Biker boots Colour: calipso/ebano business , Nike Sneakers - Men Nike Sneakers online on YOOX United Kingdom - 11549301VOExibit Sneakers - Men Exibit Sneakers online on YOOX United Kingdom - 11464947XWValsport Sneakers - Men Valsport Sneakers online on YOOX United Kingdom - 11542455TJ , Springa Sneakers - Men Springa Sneakers online on YOOX United Kingdom - 11457159RLadidas Performance ALPHABOUNCE BEYOND - Neutral running shoes - carbon/grey three/core blackmens/womens Tommy Hilfiger Laston Sneakers & Athletic Tommy Hilfiger Good world reputation , man/woman EMU Australia Agonis Sneakers & Athletic EMU Australia Long-term reputation , men's/women's Rockport Charles Road Slip-On Loafers Win the praise of customersJfw gaston canvas mix trainers , navy blue, Jack & Jones , Gaimo Sandals - Women Gaimo Sandals online on YOOX United Kingdom - 11447114EUOroscuro Ankle Boot - Women Oroscuro Ankle Boots online on YOOX United Kingdom - 11455959OMVicini Tapeet Sandals - Women Vicini Tapeet Sandals online on YOOX United Kingdom - 11180080RSChiara Ferragni Sandals - Women Chiara Ferragni Sandals online on YOOX United Kingdom - 11554155XJiQijLM3k APLAUSO 55500 SHOES FOR WOMENbusiness Old West Boots TBM3013the most economical womens White/Tan 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.