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.Giuseppe Zanotti Ankle Boot - Women Giuseppe Zanotti Ankle Boots online on YOOX United Kingdom - 11445956JD , Patrizia Pepe Ankle Boot - Women Patrizia Pepe Ankle Boots online on YOOX United Kingdom - 11521795VIPatrizia Pepe Flip Flops - Women Patrizia Pepe Flip Flops online on YOOX United Kingdom - 11436122TU , Islo Isabella Lorusso Court - Women Islo Isabella Lorusso Courts online on YOOX United Kingdom - 11480674OE , Dolce & Gabbana Court - Women Dolce & Gabbana Courts online on YOOX United Kingdom - 11217987CX , ZUsqgK68 men/women Baffin Verbier Boots wonderful , Moa Master Of Arts Sneakers - Women Moa Master Of Arts Sneakers online on YOOX United Kingdom - 11420467LL , CALIFERS Salones Mujer Piel La Vie Collection Ja1006mc78-negro ZAPATO DE SALóN PARA MUJERChie Mihara JELLY - Classic heelsmens/womens Deer Stags Method Oxfords cheapestASOS DESIGN | ASOS DESIGN Harrison Embellished Heeled SandalsRAID Wide Fit TAYLOR - High heeled sandals , Vagabond | Vagabond Cherie Strappy Leather Heeled Sandals , Merrell Sneakers - Men Merrell Sneakers online on YOOX United Kingdom - 11581795DE , Regain Loafers - Men Regain Loafers online on YOOX United Kingdom - 11516391PR , Tod's Sneakers - Men Tod's Sneakers online on YOOX United Kingdom - 11541237RB , Tod's Loafers - Men Tod's Loafers online on YOOX United Kingdom - 11378042SCAdidas Steve Madden RENNE - High heeled ankle boots - black , O.X.S. Loafers - Women O.X.S. Loafers online on YOOX United Kingdom - 11456358PN , Piampiani Sneakers - Women Piampiani Sneakers online on YOOX United Kingdom - 11491486KO , Ouigal Court - Women Ouigal Courts online on YOOX United Kingdom - 11179502CJ , Philippe Model Sneakers - Women Philippe Model Sneakers online on YOOX United Kingdom - 11577374VAMalìparmi Flip Flops - Women Malìparmi Flip Flops online on YOOX United Kingdom - 11301327FE , At an affordable price Reebok Lifestyle Workout Plus , Moderate cost Schutz Anna Lee , etnies Marana You've endured through multiple rounds and are still swinging. Stand up to the rigors of skateboarding with the durable Marana from Etnies.dvo31Lko Women's SCHUTZ Black Sandals Wholesale , Tory Burch Navy Blue Mini Miller Thong 45mm Wedge Lizard Embossed Sandals , Nike Grey and Pink Flex Trainer 4 Sneakers , lady Sergio Rossi Mettalic Copper Platforms clearance sale ,
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.