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.Loretta Pettinari Ankle Boot - Women Loretta Pettinari Ankle Boots online on YOOX United Kingdom - 11477229AU , Philipp Plein Ankle Boot - Women Philipp Plein Ankle Boots online on YOOX United Kingdom - 11451146WGConverse All Star Sneakers - Men Converse All Star Sneakers online on YOOX United Kingdom - 11522708PU , Roberto Botticelli Sneakers - Women Roberto Botticelli Sneakers online on YOOX United Kingdom - 11406055MB , Hybrid Runner Unrest Men’s Running Shoes | Puma Black-Firecracker | PUMA Running + Training | PUMA United StatesGeorge J. Love Ballet Flats - Women George J. Love Ballet Flats online on YOOX United Kingdom - 11537364CO , Dansko White & Caramel Lottie Full Grain 4902 010679 Sandals , woman Prada Camel Sandals Win the praise of customersTHIERRY RABOTIN 715 ZAPATO DE CU?A PARA MUJERman/woman Tommy Hilfiger Rlaran Sandals special functionmen's/women's Chinese Laundry Radiance Boot Boots Attractive and durable , Men/Women Diane von Furstenberg Mortelle Heels Rich on-time deliveryMen/Women Naturalizer Nora Heels Adequate supply and timely deliveryAdidas New Balance MS574 - Trainers - blackTommy Jeans BASKET - Trainers - whiteNew Balance MS247 - Trainers - marble headPollini Loafers - Men Pollini Loafers online on YOOX United Kingdom - 11569875RP , Dsquared2 Sneakers - Men Dsquared2 Sneakers online on YOOX United Kingdom - 11298780POHogan Sneakers - Men Hogan Sneakers online on YOOX United Kingdom - 11560305ON , Bcbgeneration Sandals - Women Bcbgeneration Sandals online on YOOX United Kingdom - 11374604DIVans Sneakers - Women Vans Sneakers online on YOOX United Kingdom - 11573881FSPedro García Court - Women Pedro García Courts online on YOOX United Kingdom - 11064228NKValentino Garavani Sandals - Women Valentino Garavani Sandals online on YOOX United Kingdom - 11264995AM , Alberto Guardiani Sneakers - Women Alberto Guardiani Sneakers online on YOOX United Kingdom - 11567991OK , Ash Ankle Boot - Women Ash Ankle Boots online on YOOX United Kingdom - 11442818CPTide shoes list Jewel Badgley Mischka Ginger , a wide variety of goods Kamik SnoValley 2 , WOMEN Gianvito Rossi Gold Hydra Sandals A balance between toughness and hardness , Nike Black Metallic Multicolor Air Jordan 5 Og SneakersTory Burch White Floral Thandie Thong Sandals ,
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.