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.Bruno Magli Ballet Flats - Women Bruno Magli Ballet Flats online on YOOX United Kingdom - 11333153PTDiadora Heritage Sneakers - Women Diadora Heritage Sneakers online on YOOX United Kingdom - 11352054VE , Just Cavalli Court - Women Just Cavalli Courts online on YOOX United Kingdom - 11485461KISKECHERS Performance Go Walk Lite Glam , NATURE 3902 ZAPATO DE CU?A PARA MUJER , ladies Steve Madden Multicolor Slide Sandals qualitymens/womens Walking Cradles Joy Heels Online ShoppingMerrell FLEX LUNA - Hiking shoesPolo Ralph Lauren MAILA - Cowboy/Biker boots Colour: bisqueSuperdry CHERYL MILITARY BOOT - Cowboy/Biker boots Colour: blackmen/women Schutz Floppy Heels Modern and stylish fashionBuscemi Boots - Men Buscemi Boots online on YOOX United Kingdom - 11471370PA , Pony Sneakers - Men Pony Sneakers online on YOOX United Kingdom - 11489053FU , Tod's Sneakers - Men Tod's Sneakers online on YOOX United Kingdom - 11310176DE , Adidas Joshua Sanders ZENITH BOMBER - Trainers - military green , Officina 36 Boots - Men Officina 36 Boots online on YOOX United Kingdom - 11492454FW , Voile Blanche Sneakers - Men Voile Blanche Sneakers online on YOOX United Kingdom - 11534656TRSara Sandals - Women Sara Sandals online on YOOX United Kingdom - 11499723CM , Crime London Sneakers - Women Crime London Sneakers online on YOOX United Kingdom - 11094395LF , Guess Ankle Boot - Women Guess Ankle Boots online on YOOX United Kingdom - 11300648DICastañer Ankle Boot - Women Castañer Ankle Boots online on YOOX United Kingdom - 11557747SQ , Fratelli Rossetti Loafers - Women Fratelli Rossetti Loafers online on YOOX United Kingdom - 11473677GKNWaYtwCL SOTOALTO Rayi SLIP-ON PARA MUJER , WOMENS Laurence Dacade White Diane Sandals a good reputation in the world , Salvatore Ferragamo Blush Nude Leather Strap Double Logo Buckle Blockheel SandalsWomen's Christian Louboutin Leopard Pump Wedges First group of customersLadies Stuart Weitzman Blac 40511 Wedges Popular tide shoes , ALDO Red White Blue High Top Sneakers , Nike Oatmeal Huarache Run Ultra Sneakers SneakersLola Cruz Rose Gold Jeweled Flats 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.