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.Jack & Jones Sneakers - Men Jack & Jones Sneakers online on YOOX United Kingdom - 11441501THAntonio Marras Court - Women Antonio Marras Courts online on YOOX United Kingdom - 11465747DLAlysi Ankle Boot - Women Alysi Ankle Boots online on YOOX United Kingdom - 11495919MERachel Comey Blush Pink Cleo Sandals , Manas Lea Foscati Court - Women Manas Lea Foscati Courts online on YOOX United Kingdom - 11500978KS , Marc by Marc Jacobs Off White Black "Ninja" Sneakers Sneakers , Matiko Papaya Spring Perforated Willow High Tops Sneakers , LOVE MOCHINO Ja15032g16s LOW-TOP TRAINERS FOR WOMENLADY Matt Bernson Blush Gladiator Sandals tendermen's/women's Bandolino Fabia Heels Various latest designs , men's/women's Frye Madeline Trim Shorts Boots quality , men/women Sbicca Percussion Boots Brand feast , men's/women's Ivanka Trump Lnde Boots fashion , men's/women's Tahari Parson Heels Elegant shape , BEBO CLARA - High heelsmens/womens VOLATILE Ohara Boots Elegant and sturdy set mealman/woman David Tate Ash Sandals Various latest designs , Kennel + Schmenger SELMA - Classic heelsPremiata Boots - Men Premiata Boots online on YOOX United Kingdom - 11145337RP , mens/womens PUMA Suede Classic Tonal Sneakers & Athletic PUMA Current shapeman/woman Earth Origins Sullivan Sandals Strong heat and wear resistance , Moschino Sandals - Women Moschino Sandals online on YOOX United Kingdom - 11341294IISpringa Sneakers - Women Springa Sneakers online on YOOX United Kingdom - 11456693GENero Giardini Sneakers - Women Nero Giardini Sneakers online on YOOX United Kingdom - 11529827OQRuco Line Sneakers - Women Ruco Line Sneakers online on YOOX United Kingdom - 11496927PQEye Ankle Boot - Women Eye Ankle Boots online on YOOX United Kingdom - 11284807PHwomens Hermès Summer Sandals Modern design , Valuable boutique Josef Seibel Tonga 25 , WOMEN L.A.M.B. Tan Anika Sandals King of the quantity , Stuart Weitzman Beige Nude Strappy Wedge Sandals ,
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.