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.Philipp Plein Ankle Boot - Women Philipp Plein Ankle Boots online on YOOX United Kingdom - 11484086KJSKECHERS Performance Go Walk Lite Floret , Common Projects Pink Achilles Suede Sneakerswoman Valentino Rock Stud Sandals qualityAlegria by PG Lite Black/ Metallic Camille Cam 372 Slide SandalsMTNG 57594 Dama C41349 Champagne SANDALIA PLANA DE MUJERWomen's Isabel Marant Sneaker Wedges Not so expensive , Nike Bronze Gold Max Thea Joli Sneakers , womens Tory Burch 511486772 Wedges Price reductionmens/womens Dolce Vita Celine Boots have fun , men/women Calvin Klein Jonas Boots Very practical , men/women Naturalizer Westing Boots product qualityPier One Platform boots Colour: black , Gabor WIDE FIT - TrainersYes I Do PEARLY MODERN - Classic heels Colour: nude , Y-3 Sneakers - Men Y-3 Sneakers online on YOOX United Kingdom - 11398698DV , Kanna Sneakers - Women Kanna Sneakers online on YOOX United Kingdom - 11570721VS , Adidas Originals Sneakers - Women Adidas Originals Sneakers online on YOOX United Kingdom - 11453146RTPrincess® Bologna Loafers - Women Princess® Bologna Loafers online on YOOX United Kingdom - 11456823XREmanuélle Vee Sandals - Women Emanuélle Vee Sandals online on YOOX United Kingdom - 11435246NSPierre Hardy Sandals - Women Pierre Hardy Sandals online on YOOX United Kingdom - 11140210EJ , Known for its beautiful quality Franco Sarto Delight 2Aesthetic appearance Tretorn Nylite BoldClergerie Belen Be fiercely fashionable with every footfall in Robert Clergerie. , womens BCBGMAXAZRIA Blush Amaris Formal Shoes At a lower pricelady Lanvin Nude Wedges First group of customersRocket Dog Light Cotton Denim Generaldo SneakersCole Haan Silver Nike Air Maddy SandalsWOMENS Bally Black Edwards Sandals Stable quality , WOMEN Black P9110 Sandals Economical and practical
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.