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.Paula Cademartori Flip Flops - Women Paula Cademartori Flip Flops online on YOOX United Kingdom - 11492353JM , Roberto Festa Sandals - Women Roberto Festa Sandals online on YOOX United Kingdom - 11494776HHNero Giardini Sneakers - Women Nero Giardini Sneakers online on YOOX United Kingdom - 11538998AEFitFlop Loosh Luxe™ Z-Strap Leather SandalsPolo Ralph Lauren Court 100 Lux , ALPE 339611 FASHION FOOTWEAR FOR WOMEN , Dibrera By Paolo Zanoli Ankle Boot - Women Dibrera By Paolo Zanoli Ankle Boots online on YOOX United Kingdom - 11445279ICPrada America's Cup Black Nylon Sneaker Colored Crystals and Beads Sneakers , women Salvatore Ferragamo Tan Sandals New products in 2268 , BOBS from SKECHERS Luxe Bobs - Dazzlin' Doll , Levi's® Shoes Jeffrey 501 Button Your Fly , mens/womens Easy Street Starlet Heels Lush designCassis c?te d'azur COSETTE - Sandals , men/women Brighton Katia Heels Perfect processing , Adidas GARMENT PROJECT TYPE - Trainers - bordeauxEtnies METAL MULISHA FADER 2 - Skate shoesMen/Women Propet Madison Mid Zip Boots Recommended today , Lanvin Sneakers - Women Lanvin Sneakers online on YOOX United Kingdom - 11530000GK , Suicoke Sandals - Men Suicoke Sandals online on YOOX United Kingdom - 11572776AO , Rodo Sneakers - Women Rodo Sneakers online on YOOX United Kingdom - 11254920RBSara López Boots - Women Sara López Boots online on YOOX United Kingdom - 11529566BD , Rada' Ankle Boot - Women Rada' Ankle Boots online on YOOX United Kingdom - 11548807PXPantofola D'oro Sneakers - Men Pantofola D'oro Sneakers online on YOOX United Kingdom - 11569838GCAttractive fashion Vans SK8-Hi Platform 2.0Known for its beautiful quality 361 Degrees StratomicWe have won praise from our customers. Touch Ups Queenie , Aetrex Layla Cultured and well-traveled! The Aetrex Layla is the perfect sandal for the adventurous type on the go!Mezlan Castillo Look on-point when you step out in the Mezlan Castillo bootChristian Louboutin Black Trezanita Spike Studded Patent Ankle Strap 37.5 Sandals , WOMENS Mauve N Grey Sandals Beautiful art ,
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.