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.Chiara Ferragni Ballet Flats - Women Chiara Ferragni Ballet Flats online on YOOX United Kingdom - 11546733AT , Vagabond Shoemakers Ankle Boot - Women Vagabond Shoemakers Ankle Boots online on YOOX United Kingdom - 11574069JS , COOLWAY Cayla FASHION LOAFERS FOR WOMEN , Elegant and stable packaging Mules , black, Coolway , YOKONO Sofia 012 Marino FASHION ANKLE BOOTS FOR WOMENPEPE JEANS Pls 30642 LOW-TOP TRAINERS FOR WOMEN , LADY Alexandre Birman Rainbow Python Wedges Low costsmen's/women's Nine West Loyal Boots Personalization trendmen/women Keen Maupin Sandals Fine artWl574ksd trainers , purple, New BalanceAdidas ALDO TIRESA - High heeled sandals - black , men's/women's PUMA Osu NM Sneakers & Athletic PUMA Cheap , Adidas mint&berry Classic ankle boots - bordeaux , Santoni Sneakers - Men Santoni Sneakers online on YOOX United Kingdom - 11250589IX , men's/women's Easy Spirit Ginada Flats a good reputation in the world , Fred Perry | Fred Perry Byron low suede shoes in black , The Kooples TOPSTITCHES BOOTS - High heeled ankle boots Colour: black , mens/womens Cole Haan Grandpro Deck Oxford Sneakers & Athletic Cole Haan reliable qualityValetti Sandals - Women Valetti Sandals online on YOOX United Kingdom - 11474030RC , Happiness Sneakers - Women Happiness Sneakers online on YOOX United Kingdom - 11545859JNElisabetta Franchi Boots - Women Elisabetta Franchi Boots online on YOOX United Kingdom - 11541309GX , Voile Blanche Sneakers - Women Voile Blanche Sneakers online on YOOX United Kingdom - 11538278DXVic Matiē Sandals - Women Vic Matiē Sandals online on YOOX United Kingdom - 11355051SX , Fendi Orange Red / Coral SandalsN8F8S3Q3 Sperry Striper II CVO WashedExquisite workmanship Florsheim Salerno Wingtip Oxford , Outstanding function Rockport Dustyn Waterproof Chukka , Perfect processing Finn Comfort HollisterSteven Naylor Create a timeless look with this timeless Steven Naylor heel. , ladies Tory Burch Tan Zoey Sandals Pleasant appearance ,
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.