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.Donna Più Ankle Boot - Women Donna Più Ankle Boots online on YOOX United Kingdom - 11527115TQPrada Brown Vero Cuoio Woven SandalsWOMENS Anthropologie Green Sandals Elegant appearance , Lucy Choi London Ankle Boot - Women Lucy Choi London Ankle Boots online on YOOX United Kingdom - 11480440GWColors Of California Sandals - Women Colors Of California Sandals online on YOOX United Kingdom - 11456817WL , womens Colin Stuart Brown Suede Sandals Good worldwide reputation , TOP WAY B056833-b6600 Black THIGH BOOTS FOR WOMENWOMEN J.Crew Cream Wedding Formal Shoes Authentic guarantee , lady Steve Madden Chestnut Villano Sandals Negotiate , WOMENS Tory Burch White Heeled Sandals CharacteristicLodi EBRO - Classic heels Colour: baltico/oro , Steve Madden FUEGO - TrainersCtas hi tri block canvas high trainers , black, ConverseLeather wedge heel sandals , black, Les Tropeziennes Par M.BelarbiAdidas Calvin Klein JACINTA - Slip-ons - platinum white , man/woman Chooka Deco Laser Cut Bootie Boots Excellent functionmen/women Sigerson Morrison Aoven Sandals King of the crowdAir zoom pegasus 35 running shoes , black, NikeAquazzura Boots - Women Aquazzura Boots online on YOOX United Kingdom - 11496514KH , Nike Performance MAMBA RAGE - Basketball shoes - electric green/black/green apple/volt/universal redThe Yorker Loafers - Men The Yorker Loafers online on YOOX United Kingdom - 11563878FW , men/women Indigo Rd. Leroy Sneakers & Athletic Indigo Rd. Ranked first in its class , Novelty Sneakers - Women Novelty Sneakers online on YOOX United Kingdom - 11464760DO , Rick Owens Boots - Women Rick Owens Boots online on YOOX United Kingdom - 11519739MR , Alaïa Ankle Boot - Women Alaïa Ankle Boots online on YOOX United Kingdom - 11567887EE , Sigerson Morrison Boots - Women Sigerson Morrison Boots online on YOOX United Kingdom - 11424200ICOutstanding function Katy Perry The GypsyAt an affordable price SKECHERS Flex Reform , Ladies Tory Burch Blue Red Sandals Easy to handle , woman Tory Burch Blue Miller Sandals economy ,
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.