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.woman Prada Gold I.e Sandals Ideal gift for all occasions , lady Stuart Weitzman Cream/Silver Pumps Strong heat and wear resistance , woman Chloé Black Tucson Wedges Easy to clean surfaceLadies Jeffrey Campbell Fringe Sandals Quality firstman/woman L.K. Bennett Harri Boots Reliable performanceLa Sportiva TX3 GTX - Climbing shoes - black/yellow , men's/women's Vaneli Shirin Flats King of the crowd , Diadora N.92 - Trainers - paloma/charcoal grayManebí Espadrilles - Women Manebí Espadrilles online on YOOX United Kingdom - 11355324CSChurch's Loafers - Men Church's Loafers online on YOOX United Kingdom - 11485417JE , Faith Wide Fit ALLY WIDE - Ankle strap ballet pumps , mens/womens Dr. Scholl's Sola Strap Sneakers & Athletic Dr. Scholl's comfortability , L'espadrille Tropezienne® Espadrilles - Women L'espadrille Tropezienne® Espadrilles online on YOOX United Kingdom - 11510979EA , Ruco Line Sneakers - Women Ruco Line Sneakers online on YOOX United Kingdom - 11496068HF , U.S.Polo Assn. Sneakers - Women U.S.Polo Assn. Sneakers online on YOOX United Kingdom - 11517745DA , Tiffi Ankle Boot - Women Tiffi Ankle Boots online on YOOX United Kingdom - 11547820KJ , Fitflop Flip Flops - Women Fitflop Flip Flops online on YOOX United Kingdom - 11176670THLiu ?Jo Court - Women Liu ?Jo Courts online on YOOX United Kingdom - 11500559KJ , Campomaggi Flip Flops - Women Campomaggi Flip Flops online on YOOX United Kingdom - 11578989TO , Puma Blue/Pink/Silver Basket Heart Bauble SneakersoDQEuagv ECCO Soft 8 Street Tie9TpGQjZ1 Ladies Tibi White Sandals bestsell , feature bernie mev. Michelle 2British temperament Steve Madden NightcapLaredo Pequin The Laredo Pequin boot has a sleek leather design with a comfortable fit and intricate Western details, making this an ideal cowboy's boot. , LADY Tory Burch Blush Lexington Wedges Won highly esteemed and widely trusted at home and abroadJordans Black with Sky Blue and Yellow/Grey Accents Sneakers , Merrell Blue Pace Glove Style 1113842 Sneakers , Tibi Black Baxter Abstract-print Paint Splatter SandalsGiuseppe Zanotti Brown Toe Ring Crystal 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.