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.Twin-Set Simona Barbieri Court - Women Twin-Set Simona Barbieri Courts online on YOOX United Kingdom - 11484913WH , Chie Mihara Muddy - Court - Women Chie Mihara Courts online on YOOX United Kingdom - 11547978WRThe Last Conspiracy Boots - Men The Last Conspiracy Boots online on YOOX United Kingdom - 11517182RHIsabel Marant Silver Over Golden Sneakerswomens Steve Madden Leopard Wedges finishingBadgley Mischka Black 64 Satin Strappy Made In Italy SandalsManolo Blahnik Gold Patent Wrap Strap Heels Sandalslady Tan Kezia Sandals Elegant and robust menuLADY Prada White Oxford Sneakers First quality , womens Nike Orange Lebron 12 Sneakers durability , Men/Women JBU Sideline Encore Flats Complete specification , Puma RS 0 PLAY - Trainersmens/womens VOLATILE Griselda Heels Popular recommendationman/woman Blundstone BL1460 Boots Reliable reputationVersace High-top trainers - oro/neroLFL by Lust For Life Rapportmen's/women's Lugz Convoy 6" Boots Don't worry when shoppingman/woman Dr. Martens Mae Mary Jane Loafers Wholesale trademens/womens Chinese Laundry Rashelle Boot Boots Reliable performance , Platform core gum wedge trainers , pink, Puma , Lumberjack Sneakers - Men Lumberjack Sneakers online on YOOX United Kingdom - 11507099GLNew Look Wide Fit WIDE FIT TAMMIE - Sandals Colour: white , man/woman Shepherd STEFFO - Slippers International big nameMen/Women Bogs Auburn Slip-On Boot Rubber Boots Diverse new designFiorentini+Baker Ankle Boot - Women Fiorentini+Baker Ankle Boots online on YOOX United Kingdom - 11545973HNPorts 1961 Sneakers - Women Ports 1961 Sneakers online on YOOX United Kingdom - 11526372HB , Hogan Rebel Sneakers - Women Hogan Rebel Sneakers online on YOOX United Kingdom - 11214266JMVersace Collection Sandals - Men Versace Collection Sandals online on YOOX United Kingdom - 11580714FFAt a lower price Sperry Songfish ChambraySanuk TKO Knock clean and comfortable style out of the park with the fresh look of the Sanuk TKO kicks!
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.