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.The Editor Sneakers - Women The Editor Sneakers online on YOOX United Kingdom - 11276309KF , Alberto Moretti Sandals - Women Alberto Moretti Sandals online on YOOX United Kingdom - 11534266LVMISS Tory Burch Fleming Sandals economicalPuma Smash v2 V Fresh Sneakers | Puma W-Puma W-Amazon GreenBMW Motorsport Speed Cat netFIT Blue Sneakers | Team Blue-Team Blue-Puma WhtLADY Puma Electric Green Men Sneakers Big clearance saleLADY Taryn Rose Black Abella-camosci Wedges wear-resistantPearl Izumi EM Trail N 2 v2men's/women's Palladium Pallafuze Boots New product , mens/womens Haflinger Moccasin Slippers Modern designPedro Miralles Classic heels Colour: golden/neroMen/Women Ariat Unbridled Avery Boots Online export storePuma HEART STREET 2 - Trainers Colour: black , Geox Loafers - Men Geox Loafers online on YOOX United Kingdom - 11498715MHmen's/women's Aetrex Essence Adele Boots A balance between toughness and hardnessFilling Pieces Sneakers - Men Filling Pieces Sneakers online on YOOX United Kingdom - 11496654XN , Philipp Plein Sneakers - Women Philipp Plein Sneakers online on YOOX United Kingdom - 11463014SN , Sergio Rossi Boots - Women Sergio Rossi Boots online on YOOX United Kingdom - 11547339CC , Peserico Open-Toe Mules - Women Peserico Open-Toe Mules online on YOOX United Kingdom - 11567297OQSuoli Ankle Boot - Women Suoli Ankle Boots online on YOOX United Kingdom - 11484292EISFTYb35H Finn Comfort Catalina - 2538q9PJGifR Sanuk Pair O Dice PrintsCheap Rockport Daisey Panel Boot , real Wolverine I-90 Welly CarbonMAXMany varieties Nike Run Swift , 7GTqkHiP WOMENS Burberry Black/Gold Sandals QueenslandWomen's Fendi Black Leather Monster Sneakers Special promotions at the end of the yearLadies Valentino Sneakers Sneakers First class in his class , Women's Nike Blue and Yellow Sneakers Authentic guaranteeLADY Christian Louboutin Metallic Gold Platforms Free ,
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.