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.Class Roberto Cavalli Sandals - Women Class Roberto Cavalli Sandals online on YOOX United Kingdom - 11563110WF , WOMEN Manolo Blahnik Tan Sandals DiscountConverse All Star Ctas Ox Big Eyelet Flowers Details - Sneakers - Women Converse All Star Sneakers online on YOOX United Kingdom - 11461329MX3.1 Phillip Lim Ankle Boot - Women 3.1 Phillip Lim Ankle Boots online on YOOX United Kingdom - 11515631SRLE COQ SPORTIF Currtone LOW-TOP TRAINERS FOR WOMENGivenchy Urban Street Logo Band Leather Sneakers Sneakers , man/woman Stacy Adams Napa Loafers Fine wildStradivarius | Stradivarius Zip Front Stiletto Boot , man/woman Matisse Columbia Heels Personalization trendEllis betty leather ankle boots , black, ClarksDsquared2 Sneakers - Women Dsquared2 Sneakers online on YOOX United Kingdom - 11555794BI , Ras Sneakers - Women Ras Sneakers online on YOOX United Kingdom - 11240029QHmen's/women's Charles by Charles David Chris Clogs & Mules Sales Italy , Adidas Puma SUEDE CLASSIC PINCORD - Trainers - buckthorn brownBruschi Loafers - Women Bruschi Loafers online on YOOX United Kingdom - 11486732USD.A.T.E. Sneakers - Women D.A.T.E. Sneakers online on YOOX United Kingdom - 11554505CPAlbano Sandals - Women Albano Sandals online on YOOX United Kingdom - 11447289ORRodo Sneakers - Women Rodo Sneakers online on YOOX United Kingdom - 11465306CELeather Crown Sneakers - Women Leather Crown Sneakers online on YOOX United Kingdom - 11563954CJ , Ruco Line Sneakers - Women Ruco Line Sneakers online on YOOX United Kingdom - 11227694HR , Diadora Heritage Sneakers - Women Diadora Heritage Sneakers online on YOOX United Kingdom - 11046987DP , MISS Dior Beigh Sneakers Excellent qualityx9WuFVPN Sperry A/O 2-Eye Nautical LeatherkyZ4WHKo ladies adidas Eqt Sneakers finishing , Salvatore Ferragamo Silver Metallic Leather Glory Mule Slide 7.5b SandalsNike Black/Black Classic Air Max 1 Ultra Essential SneakersWOMEN Me Too Libby Edelman Wedges Selected materialsLadies Fendi Sandal Wedges First in his class , lady Missoni Zig Zag Stripe Platforms Hot saleAsics Pink Purple White Kayano 20 Sneakers ,
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.