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.Pedro García Ankle Boot - Women Pedro García Ankle Boots online on YOOX United Kingdom - 44363417AGL'f Shoes Espadrilles - Women L'f Shoes Espadrilles online on YOOX United Kingdom - 11416069RR , Samuele Failli Sandals - Women Samuele Failli Sandals online on YOOX United Kingdom - 11488891GOShy By Arvid Yuki Sandals - Women Shy By Arvid Yuki Sandals online on YOOX United Kingdom - 11371685FK , Mr & Mrs Yuo Sneakers - Women Mr & Mrs Yuo Sneakers online on YOOX United Kingdom - 11537273FT , STONEFLY Event Iii 3 WEDGE ANKLE BOOTS FOR WOMENRebecca Minkoff Black Nene Suede Slip-on Platform Sneakers , women Christian Louboutin Leopard Sahara Platforms Optimal price , MISS Tory Burch Chandler Flat Sandals Low price , Nike Black Classic Flywire Lacing New SneakersLADY Valentino Lime Green Wedges Elegant shape , Bianco CHAIN SLIP IN - Mulesmen's/women's LifeStride Ravish Boots Authentic guarantee , Deportivo brillo/leopardo trainers , grey, Victoria , Massimo Matteo Cracked Block Heel Bootie , mens/womens Nine West Rumsey Heels High quality and economymen/women Sigerson Morrison Gallia Clogs & Mules Sales Italy , men/women Taos Footwear Holey Cow Boots good quality , mens/womens SKECHERS Bright Idea - Off-Base Sneakers & Athletic SKECHERS Maintenance capability , Blue by Betsey Johnson MYLA - High heeled sandals Colour: silver glittermen's/women's New Balance W490V3 Sneakers & Athletic New Balance Environmentally friendlyman/woman Kenneth Cole Reaction Reach Beyond Heels Cheaper than the price , Deimille Court - Women Deimille Courts online on YOOX United Kingdom - 11480872SFC.Waldorf Court - Women C.Waldorf Courts online on YOOX United Kingdom - 11463416XKAsh Ankle Boot - Women Ash Ankle Boots online on YOOX United Kingdom - 11159255DCIsabel Marant Taupe Bobby Calfskin Sneakers , Easy to use Rip Curl The TrestlesPrada Black Patent Peep Toe Heels 36) 479727 Sandals , Prada Orange and Black Grosgrain Web Thong Sandals , womens Prada Nude/Black Patent Bow Pumps Large selection
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.