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.Lost Ink Ankle Boot - Women Lost Ink Ankle Boots online on YOOX United Kingdom - 11521566CO , Dolce & Gabbana Sneakers - Men Dolce & Gabbana Sneakers online on YOOX United Kingdom - 11264766QXTITI COUTURE Ticc01va MENORQUINA PARA MUJER , woman Tory Burch 'mini Miller' Sandals Has a long reputation , FOXY UP D39-890 Taupe BOTA OUTDOOR PARA MUJER , Ladies Hogan 360 Black/Bordeaux Court Wedges Aesthetic appearance , ladies Tory Burch Gold Thong Sandals quality productsmen/women VOLATILE Yulissa Sandals Shopping promotionmens/womens Steve Madden Dancer Sandals PromotionDorothy Perkins Wide Fit WIDE FIT SIMONE - Sandals , men's/women's Sanita FREYA - Clogs Fine artSams?e & Sams?e VAL 9636 - Trainers Colour: whitemen's/women's 1.STATE Shannen Heels Guarantee quality and quantitymen's/women's Dansko Vanda Heels Let our products go to the worldSuperga® Sneakers - Women Superga® Sneakers online on YOOX United Kingdom - 11467829UX , Vince. Sandals - Women Vince. Sandals online on YOOX United Kingdom - 11433002RI , Fratelli Rossetti Loafers - Women Fratelli Rossetti Loafers online on YOOX United Kingdom - 11440631USqF6G6IzA Tory Burch Penelope Cap-Toe Flat , DN9t3amH ECCO Sport Track 25 Hydromax , Online Shopping Dan Post Hunter ST , Non-slip Chaco Mega Z Cloud , Adequate supply and timely delivery adidas X 18.4 FGPick up at the boutique La Canadienne Charlotte , Famous store Bruno Magli SilasGiuseppe Zanotti Gold Snake Embossed London Hi-top Sneaker Sneakers , Kenzo Black Defile Monster Leather & Mesh Sneakers SneakersDonald J. Pliner Burnt Brass D Flower M SandalsWOMENS Handmade In Spain Sandals Win highly appreciatedMISS Tabitha Simmons Leopard Margot Pumps quality productsWOMENS Gianni Bini Pink Slingback Sandals auction ,
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.