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.Hundred 100 Ankle Boot - Women Hundred 100 Ankle Boots online on YOOX United Kingdom - 11546671QX , Reebok Ventilator Adapt St - Sneakers - Men Reebok Sneakers online on YOOX United Kingdom - 44961125IVKenneth Cole Black Kid Sneaker Sneakersladies Reef Sandy Sandals Reasonable priceAVID evoKNIT Mosaic Evolution Sneakers | PBlack-IGate-GViolet | PUMA Men's Picks | PUMA United States , man/woman adidas Running adiZero TJ/PV Sneakers & Athletic adidas Running Let our goods go to the worldLadies Charlotte Olympia Black Odelle Sandals New product , Women's Madewell Black Gladiator Sandals First qualitymens/womens Dolce Vita Vana Sandals Fine artmen/women Frye Russel Tie Loafers classic style , men/women Dr. Scholl's Below Boots sellmen's/women's CL By Laundry Jasper Heels renewed on time , man/woman Naturalizer Wilda Boots New products in 2049 , Hogan Loafers - Women Hogan Loafers online on YOOX United Kingdom - 11536824NG , Diemme Sneakers - Men Diemme Sneakers online on YOOX United Kingdom - 11537772GAColmar Sneakers - Men Colmar Sneakers online on YOOX United Kingdom - 11546574RCJoshua*S Sneakers - Men Joshua*S Sneakers online on YOOX United Kingdom - 11280052QQT.U.K Sneakers - Men T.U.K Sneakers online on YOOX United Kingdom - 11528290RR , men's/women's Diadora Game L Low Mirror Sneakers & Athletic Diadora Skilled manufacturing , Tsd12 Sneakers - Women Tsd12 Sneakers online on YOOX United Kingdom - 11453859IAStrategia Ankle Boot - Women Strategia Ankle Boots online on YOOX United Kingdom - 11475263KT , Henry Beguelin Sneakers - Women Henry Beguelin Sneakers online on YOOX United Kingdom - 11484476BE , Atelier Content Sandals - Women Atelier Content Sandals online on YOOX United Kingdom - 11522581CF , Known for its beautiful quality Franco Sarto Delight 2Aesthetic appearance Finn Comfort AusseeExquisite workmanship Acorn Forest Bootie , Rich design Sam Edelman Macon , Aesthetic appearance Havaianas MLB Flip-FlopsDansko Danae Get dreamy style with dependable comfort with the Dansko Danae , MISS Prada Orange Vintage Sandal Platforms trendy ,
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.