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.The Seller Ankle Boot - Women The Seller Ankle Boots online on YOOX United Kingdom - 11504275GX , Dune London Breanne - Court - Women Dune London Courts online on YOOX United Kingdom - 11451620SC , Gei Gei Ankle Boot - Women Gei Gei Ankle Boots online on YOOX United Kingdom - 11379147GSCrockett & Jones Boots - Men Crockett & Jones Boots online on YOOX United Kingdom - 11528670SJFitFlop FF2 FF-LUX GOGOBOOT BlackTHIERRY RABOTIN 1762 ZAPATO DE CU?A PARA MUJERTamaris HEITI - Heeled mules From , man/woman Splendid Beatrix Loafers Elegant stylemen's/women's Bronx Sandals Online export storeBianco CLASSIC CHELSEA - Ankle boots FromL4k3 Sneakers - Men L4k3 Sneakers online on YOOX United Kingdom - 11527592OT , Hogan Boots - Women Hogan Boots online on YOOX United Kingdom - 11297975GP , Ras Ankle Boot - Women Ras Ankle Boots online on YOOX United Kingdom - 11354877MSStuart Weitzman Espadrilles - Women Stuart Weitzman Espadrilles online on YOOX United Kingdom - 11102157IH , Cafènoir Ankle Boot - Women Cafènoir Ankle Boots online on YOOX United Kingdom - 44880032GS , Lola Cruz Sneakers - Women Lola Cruz Sneakers online on YOOX United Kingdom - 11255191QUSuecomma Bonnie Sandals - Women Suecomma Bonnie Sandals online on YOOX United Kingdom - 11387067RS , Maison Margiela Sandals - Women Maison Margiela Sandals online on YOOX United Kingdom - 44915010BSAsics White On White Gel-haruni SneakersJ.Crew Navy Wedge Flip Flop Sandals , Long-term reputation Steve Madden Remy BootieNew in stock OOFOS OOriginal Sport SandalIn short supply Vans Slip-On SF , Superfeet Reyes Kick off your summer look with the stylish Superfeet® Reyes sandal! , Splendid Flynn Complement your chic summer style with the versatile Splendid Flynn sandal! , Powerstep Archlite Leave your feet in full comfort with the Powerstep Archlite.Christian Louboutin Silver Seava Flat Glitter Disco Ball Up Low Sneakers SneakersNike Gray Blue Green New Zoom Condition Tr Tennis Sneakers , ladies Aquazzura Red Formal Shoes official websiteLADY Burberry Multi Color Wedges Elegant style
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.