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.Windsor Smith Ankle Boot - Women Windsor Smith Ankle Boots online on YOOX United Kingdom - 11479804QKClass Roberto Cavalli Court - Women Class Roberto Cavalli Courts online on YOOX United Kingdom - 11562651KFCafènoir Flip Flops - Women Cafènoir Flip Flops online on YOOX United Kingdom - 11329890PMHogan Rebel Sneakers - Women Hogan Rebel Sneakers online on YOOX United Kingdom - 11174420WSBurberry Plaid Hartfield Housecheck Low Top Sneakers Sneakers , LADY Nike Grey and Green Sneakers Preferred material , MISS Max Mara Black Sandals price concessions , mens/womens Michael Antonio Victie-PU Boots wholesaleJil Sander Navy Boots Colour: nero , Dr. Martens Bolt Service 4-Eye Shoe , Skechers EMPIRE NIGHT BLOOM RELAXED FIT - Slip-ons Colour: navymen's/women's Cole Haan Pinch Grand Penny Loafers low costBOSS TIMELESS - High-top trainers - dark blue , man/woman Hush Puppies Reyna Mariska Boots Current shapeCat Sneakers - Men Cat Sneakers online on YOOX United Kingdom - 11581217XJ , Mizuno Sneakers - Men Mizuno Sneakers online on YOOX United Kingdom - 11541867OW , Santoni Boots - Men Santoni Boots online on YOOX United Kingdom - 11419146PT , Hogan Sneakers - Men Hogan Sneakers online on YOOX United Kingdom - 11517157NQ , P.A.R.O.S.H. Sneakers - Women P.A.R.O.S.H. Sneakers online on YOOX United Kingdom - 11119027VKCafènoir Court - Women Cafènoir Courts online on YOOX United Kingdom - 11544842DOStrategia Sandals - Women Strategia Sandals online on YOOX United Kingdom - 11531526AN , Gedebe Sandals - Women Gedebe Sandals online on YOOX United Kingdom - 11382001BF , Fabi Ankle Boot - Women Fabi Ankle Boots online on YOOX United Kingdom - 11537967IUAlberto Fermani Court - Women Alberto Fermani Courts online on YOOX United Kingdom - 11546133KN , Bottega Veneta Loafers - Women Bottega Veneta Loafers online on YOOX United Kingdom - 11489937TR , Prada Black Leather Fashion Sneakers Sneakers , Various styles Toni Pons Giada-SWin the praise of customers Pedro Garcia Yimina , lady Jimmy Choo Nude Metallic Wedges a wide range of productsMISS Prada Black Embelished Sneakers Sneakers Preferred material ,
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.