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.Mot-Clè Ankle Boot - Women Mot-Clè Ankle Boots online on YOOX United Kingdom - 11486861OUGAIMO Navas WEDGE-HEEL ESPADRILLES FOR WOMENGola HARRIER Black / EcruTwin-Set Simona Barbieri Court - Women Twin-Set Simona Barbieri Courts online on YOOX United Kingdom - 11497954AW , woman Brown Leather Divine Wedges Strong heat and heat resistanceWOMEN Prada Black 1s022h Sandals Win the praise of customers , Ladies Baby Phat Golden Sandals Elegant and solemn , STONEFLY Oxi 6 FASHION FOOTWEAR FOR WOMENChristian Lacroix White and Black Slide Sandalsmens/womens Easy Spirit Lalani Heels Attractive fashionAdidas Gabor Classic heels - copperBase London HAVOC - Classic ankle boots - blackMen/Women Colors of California Espadrilles special promotion , men's/women's Rieker R1475 Liv 75 Boots Practical and economicalmen/women Calvin Klein Ramses Oxfords Extreme speed logisticsAdidas Bullboxer Classic ankle boots - black , Hogan Sneakers - Men Hogan Sneakers online on YOOX United Kingdom - 11396968RD , Adidas Tommy Hilfiger MID WEDGE - High-top trainers - black , Diadora Heritage Sneakers - Men Diadora Heritage Sneakers online on YOOX United Kingdom - 44988607DNApepazza Sandals - Women Apepazza Sandals online on YOOX United Kingdom - 11127482BCCult Sneakers - Women Cult Sneakers online on YOOX United Kingdom - 11007230EW , Zinda Court - Women Zinda Courts online on YOOX United Kingdom - 11563191KDCatarina Martins Boots - Women Catarina Martins Boots online on YOOX United Kingdom - 11039543TFEva Turner Court - Women Eva Turner Courts online on YOOX United Kingdom - 11301238LDPhilippe Model Sneakers - Women Philippe Model Sneakers online on YOOX United Kingdom - 11263075IA , Sophia Webster Sandals - Women Sophia Webster Sandals online on YOOX United Kingdom - 11391527MSprofessional design Merrell Terran Ari Slide , Sales Italy Patricia Green Barrie , Isabel Marant Off White Jaeryn Sd0058 Sandalswomen Valentino Pink Sandal Wedges Modern technology
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.