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.F.Lli Bruglia Ankle Boot - Women F.Lli Bruglia Ankle Boots online on YOOX United Kingdom - 11525498AX , Chiara Ferragni Ankle Boot - Women Chiara Ferragni Ankle Boots online on YOOX United Kingdom - 11551851UK , Roberto Festa Ankle Boot - Women Roberto Festa Ankle Boots online on YOOX United Kingdom - 11544939IMSteve Madden Ankle Boot - Women Steve Madden Ankle Boots online on YOOX United Kingdom - 11216806SE( Verba ) Loafers - Men ( Verba ) Loafers online on YOOX United Kingdom - 11487552GDlady Lilly Pulitzer Yellow Sandals auctionJanet & Janet Ankle Boot - Women Janet & Janet Ankle Boots online on YOOX United Kingdom - 11550173QRwoman Emporio Armani N.a. Wedges At a lower priceLOIS 84720 26 Negro CASUAL SHOES FOR MANMISS Prada Espadrilles Wedges At a lower price , SENDRA BOOTS 11790 FASHION FOOTWEAR FOR WOMEN , EXE SHOES Silvia-753 FASHION SANDALS FOR WOMEN , men's/women's VOLATILE Sensation Heels high quality productmen's/women's CL By Laundry Nadia Heels Stylish and fun , man/woman Sam Edelman Gillian Boots New varieties are launched , man/woman Marchesa Lucy Flats High quality and low overhead , ASOS DESIGN | ASOS DESIGN Rakel chunky heeled bootsMizuno Sneakers - Women Mizuno Sneakers online on YOOX United Kingdom - 11481464JKJoshua*S Sneakers - Men Joshua*S Sneakers online on YOOX United Kingdom - 11521260WQ , mens/womens mtng JAKE - Trainers Various latest designsNeil Barrett Sneakers - Men Neil Barrett Sneakers online on YOOX United Kingdom - 11522496PRLiu ?Jo Loafers - Women Liu ?Jo Loafers online on YOOX United Kingdom - 11493000UMPhilippe Model Sneakers - Women Philippe Model Sneakers online on YOOX United Kingdom - 11295828XF , Leonardo Principi Loafers - Women Leonardo Principi Loafers online on YOOX United Kingdom - 11534378KX , Elegant appearance ALDO Myly Heeled SandalDingo Marlee Show off your sassy side with these sweet cowgirl bootslady Juicy Couture Blue Formal Shoes Excellent craft , womens Steve Madden Denim Truce Wedges Germany , LADY Bernie Mev Orange Wedges Exquisite workmanship , Giuseppe Zanotti Grey Silver New Sneakers ,
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.