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.Ebarrito Ankle Boot - Women Ebarrito Ankle Boots online on YOOX United Kingdom - 11457242MQGuess Ankle Boot - Women Guess Ankle Boots online on YOOX United Kingdom - 11486299WIVince Camuto Sandbar/Gold 'makoto' T-strap SandalsEva Lọpez Loafers - Women Eva Lọpez Loafers online on YOOX United Kingdom - 11543795MD , Ladies Burberry Nova Check Sandals Average costsTipe E Tacchi Ankle Boot - Women Tipe E Tacchi Ankle Boots online on YOOX United Kingdom - 11517306BMLadies Valentino Black Patent Wedges Different styles and stylesmen/women Calvin Klein Eviti Heels Best-selling worldwide , Reebok Classic Trainers - platinum/jet blueSteve Madden XINA - Platform boots , mens/womens River Island Trainers Colour: black Modern design , men's/women's Lacoste EXPLORATEUR - Trainers Aesthetic appearance , mens/womens Sigerson Morrison Aida Heels High quality and economymen/women Cole Haan Grand Evolution Chukka Boots Complete specifications , men/women Vivienne Westwood Masque Sandals Heels New design , men's/women's Donald J Pliner Kerie Boots High-quality materialsSantoni Sneakers - Men Santoni Sneakers online on YOOX United Kingdom - 11410219HKmen/women Supply Lab Daniel Sneakers & Athletic Supply Lab leading the fashionMillet OUT RUSH - Walking shoes - electric blue/butter cupYang Li Loafers - Men Yang Li Loafers online on YOOX United Kingdom - 11437136RR , men/women The North Face Endurus Hike Sneakers & Athletic The North Face Moderate priceMelissa Sandals - Women Melissa Sandals online on YOOX United Kingdom - 11365010MCMoschino Court - Women Moschino Courts online on YOOX United Kingdom - 11280787FA , Spaziomoda Ankle Boot - Women Spaziomoda Ankle Boots online on YOOX United Kingdom - 11222547DX , Roger Vivier Sandals - Women Roger Vivier Sandals online on YOOX United Kingdom - 11501824HINike Pink Flex Fury Running Sneakers , Ideal gift for all occasions Kamik Plateau Zip , Brown Black Men's Bowery Slip-on Woven Sneakers Sneakers , Tory Burch Black Patent Leather Miller Sandals , lady Alexander McQueen Withe Sneakers Sneakers brand ,
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.