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.Saucony Dxn Trainer W - Sneakers - Women Saucony Sneakers online on YOOX United Kingdom - 11017440EQBruno Premi Ankle Boot - Women Bruno Premi Ankle Boots online on YOOX United Kingdom - 11510780VB , Ruco Line Ankle Boot - Women Ruco Line Ankle Boots online on YOOX United Kingdom - 11477354UB , Suecomma Bonnie Sandals - Women Suecomma Bonnie Sandals online on YOOX United Kingdom - 11391424JPCole Haan Goldwyn II Crisscross Sandal , Tipe E Tacchi Ankle Boot - Women Tipe E Tacchi Ankle Boots online on YOOX United Kingdom - 11533364RKPellettieri Di Parma Boots - Men Pellettieri Di Parma Boots online on YOOX United Kingdom - 11505431JL , MIMAPIES Zapato Mima Pies De Piel Charol Marron 531 ZAPATO CONFORT DE MUJER , womens Eileen Fisher Patsy Metallic Sandals in short supplyWOMENS BCBGMAXAZRIA Silver Bcbg Formal Shoes Consumers firstmens/womens Steve Madden Cassandra Heels Beautiful color , Studded sandals , black, La Redoute CollectionsAdidas mint&berry High heels - black/nudemen's/women's GUESS Jacabee Boots good qualitymens/womens Caterpillar Casual Willa Tweed Boots Easy to useWide-fit gem-detail mules, sizes 38-45 , navy blue, Castaluna , Lacoste | Lacoste LT Fit 118 sneakers in whiteAdidas another project Classic ankle boots - blackKennel + Schmenger INDRA - Platform boots Colour: schwarz , Ctas dainty precious metals trainers , grey, Converse , Puma Sneakers - Men Puma Sneakers online on YOOX United Kingdom - 11559168TF , Rundholz Boots - Men Rundholz Boots online on YOOX United Kingdom - 11545748BMSaucony Sneakers - Men Saucony Sneakers online on YOOX United Kingdom - 11132285OHOfficina 36 Boots - Men Officina 36 Boots online on YOOX United Kingdom - 11543540EDEmporio Armani Sneakers - Men Emporio Armani Sneakers online on YOOX United Kingdom - 11529125CXHogan Sneakers - Women Hogan Sneakers online on YOOX United Kingdom - 11541822PMRegard Ankle Boot - Women Regard Ankle Boots online on YOOX United Kingdom - 11502466NQ , L.A.M.B. White Gwen Stefani Sneakers SneakersColin Stuart Chocolate Leather 181036-028 SandalsOfficial website Corral Boots Q0035 ,
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.