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.Mm6 Maison Margiela Court - Women Mm6 Maison Margiela Courts online on YOOX United Kingdom - 11330119TQIsabel Marant Étoile Sandals - Women Isabel Marant Étoile Sandals online on YOOX United Kingdom - 11330450IK , Palladium Ankle Boot - Women Palladium Ankle Boots online on YOOX United Kingdom - 11312240DF , Sax Ankle Boot - Women Sax Ankle Boots online on YOOX United Kingdom - 11077208AU , SOTOALTO Casually LOW-TOP TRAINERS FOR WOMENManolo Blahnik Tortoise and Gold Sandals , So•Queen Sneakers - Women So•Queen Sneakers online on YOOX United Kingdom - 11486055HJCamper MERRY Medium / Brown , Converse Limited Edition Ctas Lift Leather - Sneakers - Men Converse Limited Edition Sneakers online on YOOX United Kingdom - 11551632AR , WOMENS Valentino Brown Garavani Leather Sandals Stylish and charming , Steve Madden Brown Criss Cross Front Summer Sandals , lady Vince Camuto Navy Sandals Moderate costs , ladies Bare Traps Mandy Sandals Most economical , Adidas Zign Classic heels - nude , men/women Bernardo Cara Sandals Louis, elaborate , mens/womens Spring Step Rolim Boots Brand , man/woman David Tate Charlotte Heels At a lower price , Mercer Amsterdam WOOSTER EVO SPORTY - Trainers Colour: blackman/woman Crocs Swiftwater Deck Flip Sandals Reliable performance , Casadei Boots - Men Casadei Boots online on YOOX United Kingdom - 11500412MO , Deimille Court - Women Deimille Courts online on YOOX United Kingdom - 11488188QNRaparo Ankle Boot - Women Raparo Ankle Boots online on YOOX United Kingdom - 11536993VHCoccinelle Flip Flops - Women Coccinelle Flip Flops online on YOOX United Kingdom - 11560958DXAndrea Pinto Court - Women Andrea Pinto Courts online on YOOX United Kingdom - 11481535WRLumberjack Ankle Boot - Women Lumberjack Ankle Boots online on YOOX United Kingdom - 11558711BAJoules Popons Finish the look of the day with the chic Joules Popons shoes. , ALDO Ocelawia Finish off your dapper look with the ALDO Ocelawia moccasin , Le Coq Sportif White W/ Gray Vintage Style SneakersMISS Arche Black Pablo Wedges High quality , lady Nike Men’s Sneakers Very good quality ,
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.