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.Cinzia Araia Ankle Boot - Women Cinzia Araia Ankle Boots online on YOOX United Kingdom - 11495116RBPeople For Happiness Sneakers - Women People For Happiness Sneakers online on YOOX United Kingdom - 11581536PG18 Kt Ballet Flats - Women 18 Kt Ballet Flats online on YOOX United Kingdom - 11580796XB , Adidas Originals Prophere - Sneakers - Men Adidas Originals Sneakers online on YOOX United Kingdom - 11446661AGPrada Bicolore Sport Red/Dark Gray Athletic ShoeshruGy6lO Men/Women Isola Tavora Boots Non-slipJolie By Edward Spiers Court - Women Jolie By Edward Spiers Courts online on YOOX United Kingdom - 11526570SPladies Miu Miu Gold Metallic Pumps Let our products go out into the world , Puma Burgundy Limited Edition Velour High Tops Sneakers , ladies Helen's Heart White Wedges International choice , men's/women's DNA Footwear BV Sandals Maintenance capability , men's/women's Marc Fisher Idalee 2 Boots Fine wildPrada Loafers - Men Prada Loafers online on YOOX United Kingdom - 11267553JS , Castañer Espadrilles - Women Castañer Espadrilles online on YOOX United Kingdom - 11329062AA , Zinda Sandals - Women Zinda Sandals online on YOOX United Kingdom - 11569155LGJoshua*S Sneakers - Women Joshua*S Sneakers online on YOOX United Kingdom - 11367524BK , Michael Dass Boots - Women Michael Dass Boots online on YOOX United Kingdom - 11501756DIPhilippe Model Espadrilles - Women Philippe Model Espadrilles online on YOOX United Kingdom - 11342966HP , Kenneth Cole Gray/Black Trading Le SneakersIsabel Marant Black Carol Carol Sandals , PTsGHAjK OTAZUA 28000 SHOES FOR WOMENCharming design Toni Pons Noa , Excellent stretching Badgley Mischka Viola , Price reduction Supra Flow RunLaredo Cora Look like a gem in the gorgeous Cora boot from Laredo.SKECHERS Rumblers-Sci-Fi Be ready to catch some sun in style when wearing the Rumblers - Sci-Fi wedge from SKECHERSLadies Lucky Brand Black Wedge Platforms First in his classlady Rebecca Minkoff Erin Tassel Sandals New varieties are introduced , womens Stuart Weitzman Black 100squarenudist Sandals Nice appearance , Alegria by PG Lite Black Comfort 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.