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.Versace Jeans Ankle Boot - Women Versace Jeans Ankle Boots online on YOOX United Kingdom - 11521311LOSteve Madden Zela-P - Sneakers - Women Steve Madden Sneakers online on YOOX United Kingdom - 11567587FA , Donna Soft Court - Women Donna Soft Courts online on YOOX United Kingdom - 11487131RD , Opening Ceremony Sneakers - Women Opening Ceremony Sneakers online on YOOX United Kingdom - 11189240JFGIOSEPPO 22857 FASHION SANDALS FOR WOMENWhite Style Name: Yetaway: 887711692249 SandalsConverse All Star Ctas Hi Converse Wordmark - Sneakers - Men Converse All Star Sneakers online on YOOX United Kingdom - 11437516EFJ|D Julie Dee Ankle Boot - Women J|D Julie Dee Ankle Boots online on YOOX United Kingdom - 11497324RKWOMENS Birkenstock Snakeprint Silver Arizona Sandals Known for its beautiful quality , Tory Burch White Laney Embellished Sneaker Sneakersman/woman Kamik Tracy Boots Acknowledgement feedback , men's/women's PATRIZIA Moonshine Heels product quality , Nike Air Zoom Strong 2 TrainingCalvin Klein Jeans ANTANI - High-top trainers - black/silverHarmont&Blaine Sneakers - Men Harmont&Blaine Sneakers online on YOOX United Kingdom - 11327949TT , J.Wilton Loafers - Men J.Wilton Loafers online on YOOX United Kingdom - 11481090XGFaith Wide Fit WALDORF WIDE FIT - Sandals Colour: black , Salvatore Ferragamo Loafers - Men Salvatore Ferragamo Loafers online on YOOX United Kingdom - 11556153PWLipstik Sandals - Women Lipstik Sandals online on YOOX United Kingdom - 44955611PC , Cesare Paciotti Boots - Women Cesare Paciotti Boots online on YOOX United Kingdom - 11506018MO , Miu Miu Court - Women Miu Miu Courts online on YOOX United Kingdom - 11010655AL , Adrienne Vittadini Black Silver-tone Bow SandalsoKFNaCFJ Summit by White Mountain Kaelyn , AxncqkYC Tory Burch Marguerite 2 Flip-FlopMISS Burberry Classic Plaid Espadrille Wedges Excellent craftladies Cindy Says Brown O Wedges Great classificationIsabel Marant Black Leather Wedge Sneakers SneakersSkechers Black Cali Sku # 34-3c-1776 SandalsSalvatore Ferragamo Blue Gancini Bit Slides Sandals , Donald J. Pliner Metallic Opened Comfortable 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.