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.Pura López Ankle Boot - Women Pura López Ankle Boots online on YOOX United Kingdom - 11497483FT , Poesie Veneziane Ankle Boot - Women Poesie Veneziane Ankle Boots online on YOOX United Kingdom - 11549332KN , Del Gatto Sandals - Women Del Gatto Sandals online on YOOX United Kingdom - 11425064FG , Zanfrini Cantù Loafers - Women Zanfrini Cantù Loafers online on YOOX United Kingdom - 11524896RN , Keen Utility Redding Aluminum Toe ESDffyveibH man/woman Eastland Buck Oxfords Various , See by Chloé SB23116 BlackLadies Bernardo Brown Maxine Sandals Let our products go out into the world , LADY Emporio Armani Silver Metallic Sandals Carefully selected materialsDonald J. Pliner Bronze Antique Metallic Thong Sandals , DADá S048304792bsj FASHION ANKLE BOOTS FOR WOMENMen/Women BCBGeneration Harlow Heels cheap price , Star player leather low top trainers , navy blue, Converse , man/woman Deer Stags King Loafers At an affordable price , mens/womens Marc Fisher LTD Remone Heels Excellent performance , Tod's Boots - Men Tod's Boots online on YOOX United Kingdom - 11169086LO , Munich Sneakers - Men Munich Sneakers online on YOOX United Kingdom - 11423992ORAdidas Converse CHUCK TAYLOR ALL STAR 70 - High-top trainers - gold/egret , men/women Mark Nason Ridged - Westman Sneakers & Athletic Mark Nason Wear resistant , Corvari Boots - Women Corvari Boots online on YOOX United Kingdom - 11514288XM , Gusto Ankle Boot - Women Gusto Ankle Boots online on YOOX United Kingdom - 11520329FC , Loretta Pettinari Boots - Women Loretta Pettinari Boots online on YOOX United Kingdom - 11493785RONero Giardini Sandals - Women Nero Giardini Sandals online on YOOX United Kingdom - 11549283GQ , E...Vee Open-Toe Mules - Women E...Vee Open-Toe Mules online on YOOX United Kingdom - 11480494RM , Report Ricki Rev up your look any day of the week with the Report Ricki open-toe bootiesWOMENS Charlotte Olympia Leopard Sneakers Sneakers Highly appreciated and widely trusted in and out , MISS Nine West Purple Foxy Sandals a wide range of products , Ladies Vince Nicole White Formal Shoes Bright colors , ladies Chloé Tan/Brown Ch22341 Sandals Moderate price , WOMENS Vince Brown Leather Sandals Different styles
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.