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.Bruno Bordese Ankle Boot - Women Bruno Bordese Ankle Boots online on YOOX United Kingdom - 11496643NC , Dolce & Gabbana Sneakers - Women Dolce & Gabbana Sneakers online on YOOX United Kingdom - 11307777PIDolce & Gabbana Espadrilles - Men Dolce & Gabbana Espadrilles online on YOOX United Kingdom - 11147601UENike Performance MERCURIAL SUPERFLY 6 CLUB NJR MG - Moulded stud football boots - amarillo/white/blackECCO 12025350757 LOW-TOP TRAINERS FOR WOMEN , womens Vince Camuto Bronze Wedges Large selectionSuede classic + trainers , burgundy/white, Puma , Reebok | Reebok Classic White Leather Sneakers , Kennel + Schmenger ELLE - Sandals , mens/womens Aquatalia Valeria Heels Special price , Society CULT TASSEL LOAFER - Slip-ons - brown , E8 BY MIISTA TINDRA - Ankle boots Colour: blackAdidas Aigle MALOUINE - Wellies - noir/camelSantoni Sneakers - Men Santoni Sneakers online on YOOX United Kingdom - 11519831TL , Barbati Loafers - Men Barbati Loafers online on YOOX United Kingdom - 11465318RU , Men/Women Crocs Lina Studded Flat Flats A balance between toughness and hardnessSartori Gold Boots - Men Sartori Gold Boots online on YOOX United Kingdom - 11472861BCMen/Women Reebok Driftium Ride Sneakers & Athletic Reebok First grade in its class , Albano Sandals - Women Albano Sandals online on YOOX United Kingdom - 11537650PG , Cult Sandals - Women Cult Sandals online on YOOX United Kingdom - 11397397KJBikkembergs Boots - Women Bikkembergs Boots online on YOOX United Kingdom - 11417901BU , Sam Edelman Sandals - Women Sam Edelman Sandals online on YOOX United Kingdom - 11479601ON , Susana Traca Sandals - Women Susana Traca Sandals online on YOOX United Kingdom - 11294741DS , N° 21 Sneakers - Women N° 21 Sneakers online on YOOX United Kingdom - 11518062GBE1tqBsMs Under Armour UA Strive 7product quality Sanita Original Professional GeoOnex Mistie It is recommended that you order 1/2 to 1 full size larger than your usual size. , Bandolino Madia Give your evening ensemble an elevated boost with these chic barely-there sandals , WOMENS Lanvin Beige Heel Sandals First in his classladies Jimmy Choo Brown Portia Wedges Online sales ,
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.