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.Jessica Simpson Ankle Boot - Women Jessica Simpson Ankle Boots online on YOOX United Kingdom - 11506452PJ , Le Silla Ankle Boot - Women Le Silla Ankle Boots online on YOOX United Kingdom - 11526945EOKendall + Kylie Sandals - Women Kendall + Kylie Sandals online on YOOX United Kingdom - 11418780FH , Under Armour UA Zone 3 NMIGNITE Limitless SR evoKNIT Men's Sneakers | Forest Night | PUMA Training + Gym | PUMA United States , Via Roma 15 Flip Flops - Women Via Roma 15 Flip Flops online on YOOX United Kingdom - 11430715FX , WOMEN Gianni Bini Leopard Platforms Modern and stylish fashionwomen Bronze Inez Wedges Orders are welcome , mens/womens Bullboxer Trainers Caramel, gentlemen's/women's Steve Madden Circuit Heels Quality First , Men/Women SKECHERS Bikers - Roamer Loafers Characteristics , Air pegasus '83 trainers , pink, NikeStuart Weitzman JISSIKA - Platform boots , Pro-Keds ROYAL CLASSIC - Trainers Colour: black , Kaiser trainers , ecru, Kaporal 5Men/Women Marco Tozzi Slippers Carefully selected materials , Puma Golf MONOLITE CAT - Golf shoesSigns Sneakers - Men Signs Sneakers online on YOOX United Kingdom - 11556623VLParlanti Loafers - Women Parlanti Loafers online on YOOX United Kingdom - 11503018XPPremiata Ankle Boot - Women Premiata Ankle Boots online on YOOX United Kingdom - 11529521FJChiara Ferragni Court - Women Chiara Ferragni Courts online on YOOX United Kingdom - 11496327OJBurberry Ankle Boot - Women Burberry Ankle Boots online on YOOX United Kingdom - 11572657ND , Pierre Darré Sandals - Women Pierre Darré Sandals online on YOOX United Kingdom - 11446167LL , Prada Sport Sneakers - Men Prada Sport Sneakers online on YOOX United Kingdom - 11495652IKcLALzBgi Hunter Insulated Leather Commando Boots , Avenger A7164 Make your days on the worksite easier with the Avenger® A7164 waterproof workshoe , Carlos by Carlos Santana Denim / Natural Leather Dangler SandalsJimmy Choo Black Pathos Pat Cork Wedge Sandals , Jimmy Choo Platinum Ice Glitter Emily SandalsWOMENS Bally Black Edwards Sandals Stable quality ,
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.