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.Nila & Nila Boots - Women Nila & Nila Boots online on YOOX United Kingdom - 11473458UBJeffrey Campbell Ankle Boot - Women Jeffrey Campbell Ankle Boots online on YOOX United Kingdom - 11427129NJ , Daniele Alessandrini Homme Sneakers - Men Daniele Alessandrini Homme Sneakers online on YOOX United Kingdom - 11534425MC , Tory Burch Black Holly By Sandals , Taka Hayashi For Vault By Vans Sneakers - Men Taka Hayashi For Vault By Vans Sneakers online on YOOX United Kingdom - 11574123LOAdidas Originals By Pharrell Williams Sneakers - Men Adidas Originals By Pharrell Williams Sneakers online on YOOX United Kingdom - 11466178QD , Vibi Venezia X Yoox Loafers - Men Vibi Venezia X Yoox Loafers online on YOOX United Kingdom - 11379799GF , lady Banana Republic Copper Wedges Orders are welcomewomens Dolce Vita Black Pasha Sandals Stable qualityMango FLAN - Trainers - whiteman/woman LifeStride Melissa Loafers Exquisite processing , Hogan Sandals - Women Hogan Sandals online on YOOX United Kingdom - 11220662IVCasadei Sneakers - Men Casadei Sneakers online on YOOX United Kingdom - 11562637OQAdidas Puma TSUGI JUN SPORT STRIPES - Trainers - gray violet/white/peacoat/ribbon redNapapijri Sneakers - Women Napapijri Sneakers online on YOOX United Kingdom - 11362617CRPinko Loafers - Women Pinko Loafers online on YOOX United Kingdom - 44641413JB , Solidea Boots - Women Solidea Boots online on YOOX United Kingdom - 11498129RFqHsQdrOd MEPHISTO Georgia SHOES FOR WOMENElegant shape Callaway La Jolla SL , Fashion pattern Billabong All Day RootsContrary to the same paragraph Scarpa Kinesis Pro GTX , Elegant and sturdy packaging DC Frequency High , Roxy Katya Add a twist to your summer style with the Roxy Katya sandal! , Nike Black Women's Air Max 2016 Running Sneakerslady Burberry Brown/Check Canvas Espadrille Wedges High qualitywoman Banana Republic Gold Cork Wedges Excellent craftWomen's Balenciaga Red Leather Glove Sandals Customer firstLADY Tibi Black Kel Cutout Sandals Exquisite workmanshiplady Christian Louboutin Black Suede Sandals Bright colors , woman White Man’s Sneaker Sneakers Strong value ,
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.