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.adidas Performance PREDATOR TANGO 18.3 TF - Astro turf trainers - core black/footwear white/solar redBoc4uQQc men's/women's VIONIC Becca Boots comfortable , Enrico Fantini Change! Sneakers - Women Enrico Fantini Change! Sneakers online on YOOX United Kingdom - 11460039IJWOMENS INC International Concepts Sandals Wedges selling price , WOMENS Jeffrey Campbell Snakeskin White Wedges Nice appearance , MISS Fenty Creepers Sneakers High quality and cheap , Sams?e & Sams?e VALO - Trainers Colour: black , mens/womens French Connection Deon Heels Perfect processingMen/Women Sesto Meucci Gabbey Sandals Preferential pricemens/womens Volcom Lounger Sandals Comfortable and naturalBirkenstock ARIZONA - Slippers - blackBoxfresh ACEUS - Trainers - black , man/woman Hispanitas Muriel Heels Excellent craft , Men/Women Clergerie Sinayap Sandals Excellent performance , mens/womens Free People Marilyn Kitten Heel Boots AffordableJana WIDE FIT - Heeled mules Colour: grey , Hogan Boots - Women Hogan Boots online on YOOX United Kingdom - 11328764TO , Officina 36 Boots - Men Officina 36 Boots online on YOOX United Kingdom - 11510460TL , Schutz Court - Women Schutz Courts online on YOOX United Kingdom - 11447824GKBuscemi Sneakers - Women Buscemi Sneakers online on YOOX United Kingdom - 11506619LK , Gold&Gold Ankle Boot - Women Gold&Gold Ankle Boots online on YOOX United Kingdom - 11466772SF , Rene' Caovilla Sandals - Women Rene' Caovilla Sandals online on YOOX United Kingdom - 11434202HG , Aw3Ycpy7 Kenneth Cole Reaction Sprinter SneakerRrrCO4lv Teva Original Universal - Urban , Nw3Uz6G9 Teva Hurricane XLT2 Cross Strap , cheaper Nike Retaliation Trainer 2 , oNGG1t2W Ladies Pollini Black Platforms luxurySteven by Steve Madden Black/Gold Suede/Gold Stud Accented 1.25" Mini Wedge Sandals , Stella McCartney Black New Star Binx Platform SneakersMISS Marni Grey High Heel Pumps official website ,
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.