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.Jeffrey Campbell Ankle Boot - Women Jeffrey Campbell Ankle Boots online on YOOX United Kingdom - 11467308MJAlexander Mcqueen Ballet Flats - Women Alexander Mcqueen Ballet Flats online on YOOX United Kingdom - 11550986SOFlavio Creation Ankle Boot - Women Flavio Creation Ankle Boots online on YOOX United Kingdom - 11552885SK , Dolce & Gabbana Sandals - Women Dolce & Gabbana Sandals online on YOOX United Kingdom - 11508359DG , La Sellerie Court - Women La Sellerie Courts online on YOOX United Kingdom - 11531931XL , Ash Ballet Flats - Women Ash Ballet Flats online on YOOX United Kingdom - 11525690UHwomens Prada Brown 1x8223 Sandals brand , Me+ By Marc Ellis Court - Women Me+ By Marc Ellis Courts online on YOOX United Kingdom - 11458246UGwomens Nine West Na Formal Shoes Good worldwide reputation , DUNLOP 35318 26 Negro LOW-TOP TRAINERS FOR WOMENDr. Scholl's Scout Sandal - Original CollectionNew Balance MX818BK3 - Sports shoes - black , Lost Ink TIA MIXED STILETTO - High heelsD.A.T.E. Sneakers - Men D.A.T.E. Sneakers online on YOOX United Kingdom - 11497071KF , Puma Sneakers - Men Puma Sneakers online on YOOX United Kingdom - 11326579BL , Geox Sneakers - Men Geox Sneakers online on YOOX United Kingdom - 11542359VF , Grenson Boots - Men Grenson Boots online on YOOX United Kingdom - 11505698SN , mens/womens Tommy Hilfiger Tyor Sneakers & Athletic Tommy Hilfiger First qualitymens/womens Base London Toronto Sneakers & Athletic Base London Price reductionman/woman SKECHERS Bikers - Bold Step Sneakers & Athletic SKECHERS At a lower price , Geox Sneakers - Women Geox Sneakers online on YOOX United Kingdom - 11541744EQ , Geox Sandals - Women Geox Sandals online on YOOX United Kingdom - 11393063XLLeather Crown Sneakers - Women Leather Crown Sneakers online on YOOX United Kingdom - 11262154RNLilimill Ankle Boot - Women Lilimill Ankle Boots online on YOOX United Kingdom - 11523785XP , Miu Miu Sandals - Women Miu Miu Sandals online on YOOX United Kingdom - 11414945FNTory Burch Black Cecile 55mm Sandals , Rockport Brown Leather M *new* Sandalswoman Prada Brown with Flowers. Pumps Online export businessWomen's Jimmy Choo Black Satin-adora Sandals Year-end sales , lady FLY London Orange Wedges Modern design ,
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.