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.The Last Conspiracy Boots - Men The Last Conspiracy Boots online on YOOX United Kingdom - 11547644CXJolie By Edward Spiers Court - Women Jolie By Edward Spiers Courts online on YOOX United Kingdom - 11545036RUadidas Nemeziz Messi Tango 18.3 IN World Cup PackJohnston & Murphy Waterproof XC4(R) Hollis Wing TipMen/Women Ted Baker Aokii Oxfords Excellent qualitymen's/women's Superfeet Palisade Flats cheap priceRIVIERAS PABLO - Slip-ons Colour: marine/rouge/blanc , mens/womens Helia Boots Colour: silver Fair priceman/woman Sam Edelman Gigi 5 Sandals Many varieties , Vibram Fivefingers CLASSIC - Trainers - blackVans Sneakers - Men Vans Sneakers online on YOOX United Kingdom - 11025995SFBrawn's Boots - Men Brawn's Boots online on YOOX United Kingdom - 11528791HVCult Boots - Men Cult Boots online on YOOX United Kingdom - 11467667EP , Pawelk's Loafers - Men Pawelk's Loafers online on YOOX United Kingdom - 11424000EAHogan Sneakers - Men Hogan Sneakers online on YOOX United Kingdom - 11554267SONike Sportswear AIR SPAN II - Trainers - wolf grey/solar red/vivid purple/white/black , Hi-Tec BANDERA LITE MID WP - Walking boots Colour: charcoal/grey/goblin blue , Antonio Marras Sneakers - Men Antonio Marras Sneakers online on YOOX United Kingdom - 11467446FS , man/woman Steve Madden Emotionv Boots Highly praised and appreciated by the consumer audience , man/woman Ted Baker Tyroen 2 Sneakers & Athletic Ted Baker International big nameman/woman Cole Haan Grand Crosscourt Sneaker Sneakers & Athletic Cole Haan Human borderHogan Sandals - Women Hogan Sandals online on YOOX United Kingdom - 11150232FKTory Burch Boots - Women Tory Burch Boots online on YOOX United Kingdom - 11440218WWPhilippe Model Sneakers - Women Philippe Model Sneakers online on YOOX United Kingdom - 11202777KC , Helmut Lang Sneakers - Women Helmut Lang Sneakers online on YOOX United Kingdom - 11522636UD , Charlotte Olympia Loafers - Women Charlotte Olympia Loafers online on YOOX United Kingdom - 11536763AB , Consumer first Lugz Drifter BallisticDockers Lawton Perform your very best with the Dockers Lawton dress shoeDior Black Silver Diorissimo Canvas Low-top Sneakers SneakersSaks Fifth Avenue Light Camel Cindy Sandals
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.