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.Peter Flowers Ankle Boot - Women Peter Flowers Ankle Boots online on YOOX United Kingdom - 11537866CJ , Giuseppe Zanotti Ankle Boot - Women Giuseppe Zanotti Ankle Boots online on YOOX United Kingdom - 11446116FLDolce & Gabbana Court - Women Dolce & Gabbana Courts online on YOOX United Kingdom - 11158955XQ , Miu Miu Ballet Flats - Women Miu Miu Ballet Flats online on YOOX United Kingdom - 11368100SPJolie By Edward Spiers Ankle Boot - Women Jolie By Edward Spiers Ankle Boots online on YOOX United Kingdom - 11452103SWThe North Face Tent Mule Man - Slippers - Men The North Face Slippers online on YOOX United Kingdom - 11339016XBValentino White New Garavani Sneakers Euro (7 Us) Sneakers , Geox UOMO SNAKE - Trainers Colour: brown , men/women Vaneli Wendy Sandals Innovative design , Be Natural Classic heels Colour: blackGentle Souls by Kenneth Cole Haddie , Public Desire BOSS - High heeled ankle boots Colour: yellowmen's/women's Dr. Martens Camber Alloy Toe Boots Superb craftsmanshipAlberto Fasciani Boots - Men Alberto Fasciani Boots online on YOOX United Kingdom - 11553090SP , man/woman Clarks Kitna Walk Sneakers & Athletic Clarks A balance between toughness and hardness , Lea-Gu Sandals - Women Lea-Gu Sandals online on YOOX United Kingdom - 11472542QB , Cult Sneakers - Women Cult Sneakers online on YOOX United Kingdom - 11503463GPPinko Sandals - Women Pinko Sandals online on YOOX United Kingdom - 11422512MBP448 Sneakers - Women P448 Sneakers online on YOOX United Kingdom - 11494827IBNike Sneakers - Women Nike Sneakers online on YOOX United Kingdom - 11336518GWPhilippe Model Sneakers - Women Philippe Model Sneakers online on YOOX United Kingdom - 11360772FL , Sergio Rossi Boots - Women Sergio Rossi Boots online on YOOX United Kingdom - 11526041AQ , Susana Traca Sandals - Women Susana Traca Sandals online on YOOX United Kingdom - 11522801WE , Valentino Garavani Sandals - Women Valentino Garavani Sandals online on YOOX United Kingdom - 11210223GTGianvito Rossi Sandals - Women Gianvito Rossi Sandals online on YOOX United Kingdom - 11143148WN , Jimmy Choo Sneakers - Men Jimmy Choo Sneakers online on YOOX United Kingdom - 11538381TJ , Known for its good quality Keen Kona FlipAetrex Maureen Slide into chic and comfy styling this season with the Aetrex Maureen sandal!Stuart Weitzman Multi Colored Capri Peony Linen Sandals , lady Tory Burch 121108654 Sandals To adopt
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.