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.Le Dangerouge Ankle Boot - Women Le Dangerouge Ankle Boots online on YOOX United Kingdom - 11506337NCLoretta By Loretta Court - Women Loretta By Loretta Courts online on YOOX United Kingdom - 11506149FSRoberto Cavalli Sneakers - Women Roberto Cavalli Sneakers online on YOOX United Kingdom - 11457725MS , Prezioso Ankle Boot - Women Prezioso Ankle Boots online on YOOX United Kingdom - 11449930POART 849 BOTíN PLANO DE MUJER , Manolo Blahnik Silver Carrie Bradshaw SandalsT1cXr8qH Viale trainers , grey, NikeEmanuela Caruso Capri Open-Toe Mules - Women Emanuela Caruso Capri Open-Toe Mules online on YOOX United Kingdom - 11529443FANike Graphite Blue(Looks Gray) Revolution 2 Running Blue SneakersMen/Women Frye Wyoming Engineer Boots Speed ??refund , Converse STAR PLAYER - Trainers Colour: blue/white , mens/womens Aquatalia Valeria Heels Special priceZadig & Voltaire MOLLY OUTLINE - Ankle boots Colour: noirman/woman Nike LunarSolo Sneakers & Athletic Nike Special purchaseChrissie leather ankle boots , black with print, MjusDsquared2 Sneakers - Men Dsquared2 Sneakers online on YOOX United Kingdom - 11423318GXNike Sneakers - Men Nike Sneakers online on YOOX United Kingdom - 11428161OOHogan Sneakers - Men Hogan Sneakers online on YOOX United Kingdom - 11578830SJmens/womens Dockers by Gerli Slip-ons Practical and economicalmen/women Ryka Comfort Walk Sneakers & Athletic Ryka Special purchaseTom Rebl Boots - Men Tom Rebl Boots online on YOOX United Kingdom - 11516292XDAntica Cuoieria Boots - Men Antica Cuoieria Boots online on YOOX United Kingdom - 11556843CJ , Marc Jacobs Sneakers - Men Marc Jacobs Sneakers online on YOOX United Kingdom - 11492481CHHenderson Sneakers - Women Henderson Sneakers online on YOOX United Kingdom - 11275441SM , Schutz Sandals - Women Schutz Sandals online on YOOX United Kingdom - 11170917HFPhilippe Model Sneakers - Women Philippe Model Sneakers online on YOOX United Kingdom - 11326403LCN° 21 Court - Women N° 21 Courts online on YOOX United Kingdom - 11341202JRladies Jimmy Choo Grey Papyrus Wedges The highest quality material , ladies Alexandre Birman Navy Suede Platforms Low pricewoman Ivanka Trump Pink Ithelice Sandals diversity ,
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.