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.Armani Jeans Flip Flops - Women Armani Jeans Flip Flops online on YOOX United Kingdom - 11437839MG , Emanuélle Vee Ankle Boot - Women Emanuélle Vee Ankle Boots online on YOOX United Kingdom - 11528975DXSTROVER 1711 FASHION LOAFERS FOR WOMEN , 181 By Alberto Gozzi Ankle Boot - Women 181 By Alberto Gozzi Ankle Boots online on YOOX United Kingdom - 11221751XV , Charles by Charles David Peach Bristol Suede Ankle-wrap Sandals , womens adidas White Spring Blade Sneakers Rich designCole Haan Pink Leather Thong 'effie' Sandalswoman Charles David Brown Platforms High-quality materialsMen/Women Eric Michael Bojo Heels Special priceMen/Women Vaneli Meteor Heels the most economical , men's/women's Soludos Original Leather Loafers Excellent performance , men's/women's HELM Boots Pete Boots stable quality , mens/womens Steve Madden Bogart Loafers uniquePuma BASKET HEART - Trainers - pearl/whiteSantoni Loafers - Men Santoni Loafers online on YOOX United Kingdom - 11409551RR , Marina Yachting Sneakers - Men Marina Yachting Sneakers online on YOOX United Kingdom - 11503279NT , mens/womens Reebok Lifestyle Furylite X Sneakers & Athletic Reebok Lifestyle First batch of customers , Valleverde Court - Women Valleverde Courts online on YOOX United Kingdom - 11467583DIEspadrilles Espadrilles - Women Espadrilles Espadrilles online on YOOX United Kingdom - 11442096XR , Robert Clergerie Sandals - Women Robert Clergerie Sandals online on YOOX United Kingdom - 11498859XJ , Hannibal Laguna Boots - Women Hannibal Laguna Boots online on YOOX United Kingdom - 11541583UAGiancarlo Paoli Sandals - Women Giancarlo Paoli Sandals online on YOOX United Kingdom - 11380236LI , Aquazzura Ballet Flats - Women Aquazzura Ballet Flats online on YOOX United Kingdom - 11135553JFre7c5zLr WOMENS Me Too Wedges Excellent , Shopping promotion Kelsi Dagger Brooklyn ShaeVery practical Pikolinos Puerto Vallarta 655-8899C2 , a wide variety of goods Woodlore Ultra Shoe Tree , bargain ASICS Dan Gable EvoBurberry Light Honey Sneaker ' Hartfields ' House Check Low Top SneakersGee WaWa Blue Oat Grey Wa Sandals
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.