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.Lacoste Straightset 316 3 - Sneakers - Women Lacoste Sneakers online on YOOX United Kingdom - 11107077EE , Angela George Sneakers - Women Angela George Sneakers online on YOOX United Kingdom - 11534072KOLiu •Jo Shoes Court - Women Liu •Jo Shoes Courts online on YOOX United Kingdom - 11281616PUConverse CHUCK TAYLOR ALL STAR OX Pink , Moon Boot Pulse Nylon Plus Wp - Ankle Boot - Women Moon Boot Ankle Boots online on YOOX United Kingdom - 11440574PHUpper Class By Katia Marinello Boots - Women Upper Class By Katia Marinello Boots online on YOOX United Kingdom - 11496602QN , women Christian Louboutin Black/Gold 1140256 Pumps Superior quality , Nike Yellow Lime Green White Black Sneakers , men's/women's Jack Rogers Capri Sandals Wholesale trade , Adidas mint&berry Ballet pumps - clavelLodi RUSH - High heels , Cole Haan Mara Grand Chelsea BootieALDO FRESI - High heeled ankle boots Colour: blackmens/womens Even&Odd Slippers Colour: blue Many varieties , Casbia Sneakers - Men Casbia Sneakers online on YOOX United Kingdom - 11261242KAUltra light trainers with elastic detail , grey, La Redoute Collectionsmen's/women's Katy Perry The Peace Sneakers & Athletic Katy Perry Has a long reputationman/woman adidas Outdoor Terrex Swift Solo Sneakers & Athletic adidas Outdoor Lush designPinko Sneakers - Women Pinko Sneakers online on YOOX United Kingdom - 11471125CA , Fabi Loafers - Women Fabi Loafers online on YOOX United Kingdom - 11568241RU , Ebarrito Loafers - Women Ebarrito Loafers online on YOOX United Kingdom - 11552026AN , Hogan Sneakers - Women Hogan Sneakers online on YOOX United Kingdom - 11539879FQ , Chiara Ferragni Loafers - Women Chiara Ferragni Loafers online on YOOX United Kingdom - 11214446BG , Paul Smith Sneakers - Men Paul Smith Sneakers online on YOOX United Kingdom - 44937653VT , Giuseppe Zanotti Beige New Nude Sneakers , dEnyH4IM L'Artiste by Spring Step Copa , WOMENS Jimmy Choo Patent Wedges High quality and economy , Ladies Giuseppe Zanotti White Cork Wedges Elegant style , Balenciaga * Multicolor Low Top Sneaker Sneakerswoman J.Crew Black Espradille Wedges Primary quality ,
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.