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.lady Hermès Beige Sandals Primary qualityRIVIERABONUCCI Salones Mujer Piel Ja5214d74-negro SHOES FOR WOMENwomens Via Spiga Gold Elenora Platforms Low pricelady Pewter Braxton 04-904a Wedges Immediate deliverywomens Giuseppe Zanotti Gold Pumps Sandals On-line , Onitsuka Tiger GSM - Trainers Colour: grape/oatmeal , Dorothy Perkins SABRINA - Sandals , Adidas Camper HOOPS - Trainers - medium brown , Bianca Di High heeled ankle boots Colour: nero castromens/womens Reef Ginger Drift Sandals Extreme speed logisticsButtero® Boots - Men Buttero® Boots online on YOOX United Kingdom - 11496236PC , Premiata Boots - Men Premiata Boots online on YOOX United Kingdom - 11528979PRTod's Loafers - Men Tod's Loafers online on YOOX United Kingdom - 11541677BJ , Schutz Sandals - Women Schutz Sandals online on YOOX United Kingdom - 11479884DLFragiacomo Loafers - Women Fragiacomo Loafers online on YOOX United Kingdom - 11519586LB , Springa Sneakers - Women Springa Sneakers online on YOOX United Kingdom - 11456756NDChocolà Loafers - Women Chocolà Loafers online on YOOX United Kingdom - 11531429MO , Unisa Boots - Women Unisa Boots online on YOOX United Kingdom - 11508783FRRepetto Ballet Flats - Women Repetto Ballet Flats online on YOOX United Kingdom - 11485769KA , Sergio Rossi Boots - Women Sergio Rossi Boots online on YOOX United Kingdom - 11564521CT , Charlotte Olympia Court - Women Charlotte Olympia Courts online on YOOX United Kingdom - 11555527PMLeather Crown Sneakers - Men Leather Crown Sneakers online on YOOX United Kingdom - 11496889PO , Vince White Leather/Cobalt Suede Varin SneakersTahari Black Arrive Suede Women SandalsxdiiMSkY OTAZUA 10092 SHOES FOR WOMEN , odJFR8Rd CALLAGHAN 21908.1 SHOES FOR WOMEN , Women's Zara Black Mesh Sandals Guarantee quality and quantityChristian Louboutin Canvas & Leather Sneakersx (149471) Sneakers , Tory Burch Gold Vaughn Mirror Gladiator Sandalswoman Salvatore Ferragamo 22720 Sandals Bright colors
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.