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.Valentino Garavani Open-Toe Mules - Women Valentino Garavani Open-Toe Mules online on YOOX United Kingdom - 11515109VW , Men/Women Reebok Work Zigwild TR2 Work Sneakers & Athletic Reebok Work Adequate supply and timely deliveryPenelope Chilvers Espadrilles - Women Penelope Chilvers Espadrilles online on YOOX United Kingdom - 11438670TF1725.A Ankle Boot - Women 1725.A Ankle Boots online on YOOX United Kingdom - 11452156ATDORKING D-7495 FASHION SANDALS FOR WOMEN , MARIA MARE 66206 C15145 Serpiente N FASHION SANDALS FOR WOMEN , MELVIN AND HAMILTON Amelie 5 FASHION ANKLE BOOTS FOR WOMENRyka Beige Satin and White Moira Walk Sneakerslady Corso Como Black Sandals Not so expensive , New Look MIMOSSA - Slip-ons Colour: light pink , Del Toro High Top Laser Cut Chukka SneakerBogner OSLO - Platform boots , Merrell All Out Blaze 2 Waterproof , Steve Madden Busy Platform Espadrille Sandal , KENDALL + KYLIE ENYA - High heeled sandals Colour: silver , Men/Women Propet Emma Flats At a lower price , Adidas Boots - Men Adidas Boots online on YOOX United Kingdom - 11494116OV , Dama Boots - Men Dama Boots online on YOOX United Kingdom - 11463066ALSantoni Sneakers - Men Santoni Sneakers online on YOOX United Kingdom - 11319495VW , men/women Alice + Olivia Ezra Sneakers & Athletic Alice + Olivia Settlement Price , Dsquared2 Loafers - Women Dsquared2 Loafers online on YOOX United Kingdom - 11285332LN , Valetti Court - Women Valetti Courts online on YOOX United Kingdom - 11474265LK , Moá Sandals - Women Moá Sandals online on YOOX United Kingdom - 11501268OM , Msgm Sandals - Women Msgm Sandals online on YOOX United Kingdom - 11169263ISLanvin Court - Women Lanvin Courts online on YOOX United Kingdom - 11079662XHIcône Court - Women Icône Courts online on YOOX United Kingdom - 11432120BE , Anne Thomas Court - Women Anne Thomas Courts online on YOOX United Kingdom - 11553171LCManas Ankle Boot - Women Manas Ankle Boots online on YOOX United Kingdom - 11512825QWTory Burch Gold Miller 55mm SandalsBLVbyvin Dr. Martens 1460 Pascal Virginia ,
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.