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.Blue Les Copains Sneakers - Women Blue Les Copains Sneakers online on YOOX United Kingdom - 11548124QOAlma En Pena. Sneakers - Women Alma En Pena. Sneakers online on YOOX United Kingdom - 11525834WK , Mcq Alexander Mcqueen Boots - Men Mcq Alexander Mcqueen Boots online on YOOX United Kingdom - 11267851TQAlberta Ferretti Loafers - Women Alberta Ferretti Loafers online on YOOX United Kingdom - 11473524BD , ALCE 8380 FASHION BOOTS FOR WOMEN , PWbCSmBC Men/Women Chippewa Chukka Boots cheapest , Shy By Arvid Yuki Sandals - Women Shy By Arvid Yuki Sandals online on YOOX United Kingdom - 11371685FK , Tua By Braccialini Ankle Boot - Women Tua By Braccialini Ankle Boots online on YOOX United Kingdom - 11448771OQ , Puma Pink X Rihanna Suede Creepers Women Green-oatmeal Sneakers , men/women Sigerson Morrison Marnin Heels Medium costKappa MOXIE - Neutral running shoes , man/woman Frye Logan Chelsea Boots Modern and elegant fashion , man/woman mint&berry Ankle boots Good marketMen/Women CC Corso Como Volley Sandals Acknowledgement feedback , Guess NEW GEORG - Trainers - blackDocksteps Sneakers - Men Docksteps Sneakers online on YOOX United Kingdom - 11547931UD , adidas Performance PREDATOR 18.2 FG - Moulded stud football boots - core black/footwear whitemens/womens Cole Haan Grandpro Tennis Huarache Sneakers & Athletic Cole Haan Suitable for colorHogan Loafers - Women Hogan Loafers online on YOOX United Kingdom - 11279127HD , Deimille Court - Women Deimille Courts online on YOOX United Kingdom - 11224181MX , Cafènoir Ankle Boot - Women Cafènoir Ankle Boots online on YOOX United Kingdom - 11479620WL , Le Pepite Court - Women Le Pepite Courts online on YOOX United Kingdom - 11528364RDLaura Biagiotti Boots - Women Laura Biagiotti Boots online on YOOX United Kingdom - 11504433SBLadies Kork-Ease Beige Berit Wedges GermanyOTBT Celestial Yes, summer relaxin' looks this good!Liu •Jo Shoes Sneakers - Women Liu •Jo Shoes Sneakers online on YOOX United Kingdom - 11314814TO , Air Jordan Grey and White Wolf Grey/University Blue/White Sneakers , LADY Glint Silver Devyn Formal Shoes Crazy Price, BirminghamPrada Brown Leather Topstitched Buckle Slide Heels SandalsWOMENS J. Reneé Formal Shoes Elegant and solemn
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.