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.Divine Follie Ankle Boot - Women Divine Follie Ankle Boots online on YOOX United Kingdom - 11562849LHAndrea Morelli Sandals - Women Andrea Morelli Sandals online on YOOX United Kingdom - 11360061LJTory Burch Black/Ivory Frankie 40mm SandalsAgl Attilio Giusti Leombruni Open-Toe Mules - Women Agl Attilio Giusti Leombruni Open-Toe Mules online on YOOX United Kingdom - 11413689TGDaniele Ancarani Ankle Boot - Women Daniele Ancarani Ankle Boots online on YOOX United Kingdom - 11485709LEWOMENS Prada Black Patent Espadrilles Wedges Bright colorswomen Saint Laurent Blac Formal Shoes trendy , Massimo Dutti PERSONAL TAILORING - Trainers Colour: grey , Men/Women Lucky Brand Jenley Heels Quality products , men's/women's SKECHERS Solden - Castano Boots durable , mens/womens Rochas RO30074-07059 Sandals Selected materialsMen/Women Franco Sarto Patterson Sandals sellSKECHERS Fashion Fit - Build UpAdidas HASSIA WIDE FIT RAVENNA - Sandals - nuss , Ted Baker CAMHERI - Classic ankle boots - blackmens/womens Kenneth Cole New York Tai Heels professional designAelia leather high heel shoes , black, Cosmoparis , Steve Madden HANK - Trainers - whitePrimabase Sneakers - Men Primabase Sneakers online on YOOX United Kingdom - 11534369CJMerrell AGILITY SYNTHESIS FLEX - Trail running shoes - wrasse , Alexander Mcqueen Loafers - Men Alexander Mcqueen Loafers online on YOOX United Kingdom - 11463771AG , Lemaré Sneakers - Women Lemaré Sneakers online on YOOX United Kingdom - 11450520KG , Anna F. Loafers - Women Anna F. Loafers online on YOOX United Kingdom - 11475183TBcQIQV4Ql LADY Fendi White Sandals Germany , Seasonal hot sale Keen Howser II , Seychelles Leisure Modernize your minimalist-chic ensemble with the Seychelles Leisure slide sandal , LADY Tory Burch Natural 32208537 Sandals Louis, in detail , Ladies Cole Haan Silver Embellished Wedges product quality , lady Giuseppe Zanotti Black High Sneakers Elegant shapeWOMENS Manolo Blahnik Grey Snakeskin Pumps Modern 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.