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.Scee By Twin-Set Sandals - Women Scee By Twin-Set Sandals online on YOOX United Kingdom - 11291695QHDolce & Gabbana Loafers - Men Dolce & Gabbana Loafers online on YOOX United Kingdom - 11492450OE , SHLEP 007647 PLATFORM SHOES FOR WOMEN , SKECHERS 22882_nvbl LOW-TOP TRAINERS FOR WOMENsaYDkxPa mens/womens Roxy Nico Sandals Non-slip , Sgn Giancarlo Paoli Ankle Boot - Women Sgn Giancarlo Paoli Ankle Boots online on YOOX United Kingdom - 11474649LL , RIVIERABONUCCI Sandalias Plataforma Mujer Piel Ja8010j46-plateado WEDGE-HEEL SANDALS FOR WOMEN , Men/Women Bella-Vita Nessa II Heels best sellerRAID LAURIE - High heels Colour: black , man/woman Rachel Comey Portia Boots excellentSaucony DXN TRAINER VINTAGE - Trainers - blue/white , mens/womens Tamaris Classic heels professional design , man/woman Blue by Betsey Johnson Ansel Flats unique , Birkenstock Sandals - Men Birkenstock Sandals online on YOOX United Kingdom - 11579110OM , Diadora Sneakers - Men Diadora Sneakers online on YOOX United Kingdom - 11131941NN , Playhat Sneakers - Men Playhat Sneakers online on YOOX United Kingdom - 11537220XDNike Sneakers - Men Nike Sneakers online on YOOX United Kingdom - 11426418XG , men/women Franco Sarto Venna by SARTO Clogs & Mules Elegant appearance , Natural World Sneakers - Men Natural World Sneakers online on YOOX United Kingdom - 11551580CV , Prada Sport Sandals - Men Prada Sport Sandals online on YOOX United Kingdom - 11515321IJCuplé Court - Women Cuplé Courts online on YOOX United Kingdom - 11543730BE , Casadei Court - Women Casadei Courts online on YOOX United Kingdom - 11503675HBZinda Court - Women Zinda Courts online on YOOX United Kingdom - 11447384BFPinko Ankle Boot - Women Pinko Ankle Boots online on YOOX United Kingdom - 11552396NH , Seasonal hot sale La Canadienne Polly , PZMgjbwp Women's Zara Gunmetal Platforms tender , Ladies Prada Silver Strappy Leaves Sandals At an affordable pricePrada Black Logo Patent Leather Thong Demi-wedge Nero Sandals , LADY Burberry Red Nova Lancaster Sandals Rich on-time deliveryLadies Salvatore Ferragamo Beige Susi Pumps Exquisite workmanship
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.