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.Reebok Pump Supreme - Sneakers - Women Reebok Sneakers online on YOOX United Kingdom - 11383688FLGuess Ballet Flats - Women Guess Ballet Flats online on YOOX United Kingdom - 11519672CMCALLAGHAN 16403.2 CASUAL SHOES FOR MAN , Twin-Set Simona Barbieri Ankle Boot - Women Twin-Set Simona Barbieri Ankle Boots online on YOOX United Kingdom - 11068562OVwomen Brown Easy Spirit Wedges Highly appreciated and widely trusted in and out , womens Steve Madden White . Sandals Easy to clean surfaceWRANGLER Wl171660 Jeena Azul WEDGE-HEEL SANDALS FOR WOMEN , womens See by Chloé Sandals High quality products , men/women YOURTURN Trainers Direct businessMen/Women LAUREN Ralph Lauren Margarite Boots Online , See by Chloé Platform boots Colour: beige/naturalMen/Women Anne Klein Autumn Flats Various , Vernon leather trainers , white, Levi'sAdidas adidas Originals NMD_R1 - Trainers - core blackLowa LOCARNO GTX MID - Walking boots - steinmens/womens Crocs Bistro Peppers Clogs & Mules New marketmen's/women's Geox W MARILYSE 3 Heels Optimal price , Tropical print heels , multi-coloured, La Redoute CollectionsAir zoom winflo 5 trainers , grey, NikeGaudì Sneakers - Men Gaudì Sneakers online on YOOX United Kingdom - 11464977SNVans Sneakers - Men Vans Sneakers online on YOOX United Kingdom - 11493882KW , Miu Miu Boots - Men Miu Miu Boots online on YOOX United Kingdom - 11538417MCPantanetti Boots - Women Pantanetti Boots online on YOOX United Kingdom - 11546981PI , Tod's Loafers - Women Tod's Loafers online on YOOX United Kingdom - 11460315KI , Tsd12 Loafers - Women Tsd12 Loafers online on YOOX United Kingdom - 11537916KWJ. Adams Black White Pu Kym Round Toe Oxford Heel Sandalswoman Jimmy Choo Burgundy Platforms New varieties are introducedSpring Step Multicolored L'artiste Velcro Adjustable Strap Sandals , MISS Stuart Weitzman Leopard Wedge Sandals quality productswoman Delman Black Suede Wedges New style
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.