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.Chon Per Mario Zamagna Sandals - Women Chon Per Mario Zamagna Sandals online on YOOX United Kingdom - 11573607JO , Christian Louboutin Magenta Teal Black White Green Multi Rantus Orlato Sneakers , MARIA MARE 61256 C21010 Napal Taupe SHOES FOR WOMENWOMENS Tory Burch Coral Sandals Louis, in detail , STONEFLY Ketty 5 PLATFORM SANDALS FOR WOMEN , Women's Rafe Grey Jane Wedges Exquisite workmanshipWOMENS Herstyle Orange Jamiliah Wedges retail price , Women's Roberto Cavalli L6003 Sandals Moderate price , woman Very Volatile Tan Route Sandals uppersmens/womens Nina Wright Boots Special price , Birkenstock BOSTON - Slippers Colour: black , Adidas Steve Madden CLOVER - Ankle boots - redmen's/women's Crocs LiteRide Clog Clogs & Mules First qualityFiorangelo Boots - Men Fiorangelo Boots online on YOOX United Kingdom - 11448318KO , man/woman Circus by Sam Edelman Eva Heels Various types and styles , New Balance Sneakers - Men New Balance Sneakers online on YOOX United Kingdom - 11287427BNmen's/women's SPM Ankle boots We have won praise from our customers. , Giancarlo Paoli Court - Women Giancarlo Paoli Courts online on YOOX United Kingdom - 11479398UPPantanetti Ankle Boot - Women Pantanetti Ankle Boots online on YOOX United Kingdom - 11467870IUGiovanni Conti Loafers - Women Giovanni Conti Loafers online on YOOX United Kingdom - 11293242AIHogan Ballet Flats - Women Hogan Ballet Flats online on YOOX United Kingdom - 11120220LLxMkMdw9z Dr. Martens Work Hardie Chelsea , Preferred boutique Diane von Furstenberg TessPromotion Marc Fisher LTD FinnaGreat variety Yosi Samra Samara FlatGiuseppe Zanotti Grey Lorenz 75 Tr Donna Sneakers SneakersZara Black New Tags Strappy Studded Heels Summer SandalsWomen's Frye Red Brick Heel. Platforms Different products , woman Beige/Nude Top Sneaker Sneakers Exquisite (medium) workmanshipWOMEN Via Spiga Black Wedges Latest technology ,
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.