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 - 11523854KU , Vivienne Westwood Man Boots - Men Vivienne Westwood Man Boots online on YOOX United Kingdom - 11520243MTALCE 7469 FASHION BALLERINAS FOR WOMENAPLAUSO 3510 BOTíN PLANO DE MUJERTwin-Set Simona Barbieri Ankle Boot - Women Twin-Set Simona Barbieri Ankle Boots online on YOOX United Kingdom - 11472087PO , Foot Petals Technogel Kit - 2 TT & 1 HH , Double D Ranchwear by Old Gringo San Antonio Rose , FRATELLI MILLORETI A295beg ZAPATO PLANO PARA MUJERDorothy Perkins SADIE - Sandals Colour: mustard , Kanna EUNICE - Slip-ons Colour: sebino offwhite , Alberto Zago Classic ankle boots Colour: red , Nike Sportswear BENASSI - Pool sliders , Men/Women Nine West Markando Heels discount , man/woman Tommy Bahama Charlotte Palms Sandals Popular recommendationBarracuda Sneakers - Men Barracuda Sneakers online on YOOX United Kingdom - 11415413RU , Candice Cooper PLUS - High-top trainers Colour: nero/erosion nero/base erosion nero/tamp antracite , Diadora Heritage Sneakers - Men Diadora Heritage Sneakers online on YOOX United Kingdom - 11209181VIPianurastudio Court - Women Pianurastudio Courts online on YOOX United Kingdom - 11480507TG , Sax Loafers - Women Sax Loafers online on YOOX United Kingdom - 11525017APPinko Boots - Women Pinko Boots online on YOOX United Kingdom - 11060427WT , Marc Jacobs Sneakers - Women Marc Jacobs Sneakers online on YOOX United Kingdom - 11466474QFSam Edelman Sandals - Women Sam Edelman Sandals online on YOOX United Kingdom - 11304029OE , Charlotte Olympia Sandals - Women Charlotte Olympia Sandals online on YOOX United Kingdom - 11510175IC , Sam Edelman Blue Suede Liliana Sandals , Onex Avery It is recommended that you order 1/2 to 1 full size larger than your usual size. , Mephisto Trecy The Mephisto Trecy sneaker treats you right with lasting comfort and on-trend style!SAS Cate The covet-worthy Cate brings a feminine and sophisticated lookALDO Eliressi Modern meets timeless style in the ALDO Eliressi derby shoeWomen's Fendi Beige Sandals From the latest model , womens Aquazzura Ink Samba Sandals New 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.