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.Islo Isabella Lorusso Court - Women Islo Isabella Lorusso Courts online on YOOX United Kingdom - 11471182PJHunter Original Tour - Boots - Women Hunter Boots online on YOOX United Kingdom - 11182279ED , SKECHERS Ske 14170bkw SLIP-ON PARA MUJERMISS Giorgio Armani Black X1e123 Pumps special purchase , Men/Women Lucky Brand Pacora Heels Outstanding styleMen/Women Dunham Gavin Chukka Boots Special price , Bianco OCTOPUS - Trainers - blackmens/womens Ariat Ryman Boots Modern technology , men/women mtng Espadrilles High quality and economy , man/woman Merrell Downtown Moc Sneakers & Athletic Merrell Cheap , Nike Sneakers - Men Nike Sneakers online on YOOX United Kingdom - 11561164QXTombolini Sneakers - Men Tombolini Sneakers online on YOOX United Kingdom - 11469262VCFradi Loafers - Men Fradi Loafers online on YOOX United Kingdom - 11545479CXBikkembergs Sneakers - Men Bikkembergs Sneakers online on YOOX United Kingdom - 11332001TO , Geox Boots - Men Geox Boots online on YOOX United Kingdom - 11252973NPMetallic leather sandals with beaded detail , gold-coloured, La Redoute Collections , Adidas Puma BASKET BOW COP - Slip-ons - dusty coral/whiteStella Mccartney Sneakers - Men Stella Mccartney Sneakers online on YOOX United Kingdom - 11467097QPSchutz Court - Women Schutz Courts online on YOOX United Kingdom - 11279150TABallin Loafers - Women Ballin Loafers online on YOOX United Kingdom - 11360333ET , Estelle Sandals - Women Estelle Sandals online on YOOX United Kingdom - 11569311PDDr. Martens Loafers - Women Dr. Martens Loafers online on YOOX United Kingdom - 11237442VSMalone Souliers Sandals - Women Malone Souliers Sandals online on YOOX United Kingdom - 11520824UG , 6VoiID6W Cole Haan 2.Zerogrand LSR Wingz7OSn3nu ECCO Golf Cage Pro Boa , Long-term reputation Camper Brutus - K100245Comfortiva Amora It will be easy to fall in love with the Amora heel from ComfortivaChristian Louboutin Brown Isa 90 Espadrille (134997) Sandals , WOMENS Jimmy Choo Black Satin Sandals Immediate delivery , Prada Silver Patent Leather Thong Wedge 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.