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.Tosca Blu Shoes Sandals - Women Tosca Blu Shoes Sandals online on YOOX United Kingdom - 44849992QGDolce & Gabbana Sandals - Women Dolce & Gabbana Sandals online on YOOX United Kingdom - 11154711IK , Janet Sport Sandals - Women Janet Sport Sandals online on YOOX United Kingdom - 11361471IS , ECCO Golf BIOM G 2 Free , Dibrera By Paolo Zanoli Boots - Women Dibrera By Paolo Zanoli Boots online on YOOX United Kingdom - 11446906LUAgl Attilio Giusti Leombruni Loafers - Women Agl Attilio Giusti Leombruni Loafers online on YOOX United Kingdom - 11539943CA , Diadora Heritage Equipe Ita - Sneakers - Men Diadora Heritage Sneakers online on YOOX United Kingdom - 11447458GR , CALIFERS Sandalias Plataforma Mujer Piel Ja502z26-azul Marino FASHION BALLERINAS FOR WOMEN , Women's SCHUTZ Platina Gold Nere Sandals Consumers firstXTI 30561 Antelina Nude SHOES FOR WOMEN , Women's Banana Republic Nude Wedges quality products , SKECHERS Street Traffic - Past Times Casual Shoe , mens/womens Steve Madden Posted Heels Quality productsAir max thea trainers , black, Nike , Men/Women Vaneli Zeda Boots Beautiful colormen/women Superfeet Crane Sneakers & Athletic Superfeet In short supply , Leather boots with tassel detail , camel, La Redoute Collections , men's/women's Colors of California Slip-ons selling price , men/women ASICS GEL-Vanisher Sneakers & Athletic ASICS Aesthetic appearanceLumberjack Boots - Men Lumberjack Boots online on YOOX United Kingdom - 11507851DMAudley Court - Women Audley Courts online on YOOX United Kingdom - 11460797IF , Guerresco Court - Women Guerresco Courts online on YOOX United Kingdom - 11512354CVLaura Biagiotti Boots - Women Laura Biagiotti Boots online on YOOX United Kingdom - 11504496MT , Alexandre Birman Sandals - Women Alexandre Birman Sandals online on YOOX United Kingdom - 11524382UDVUnMD9bB Lakai Riley 2 X Motorheadgood quality Sperry Gamefish 3-EyeKamik Alborg Snow will not be a problem this winter while wearing the durable and fully functional Alborg by KamikLADY Burberry White Kids Sneaker Sneakers The first set of comprehensive specifications for customers , MISS Givenchy Tan Gladiator Style Sandals Crazy Price, Birmingham , women Prada Inchiostro(Blue)/Black Cut-out Neoprene Sneakers Good 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.