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.Marc Ellis Ankle Boot - Women Marc Ellis Ankle Boots online on YOOX United Kingdom - 11481175EWAdno® Relief 5.10 - Sneakers - Men Adno® Sneakers online on YOOX United Kingdom - 11237981EWN.D.C. Made By Hand Boots - Men N.D.C. Made By Hand Boots online on YOOX United Kingdom - 11225282ISNike Benassi Jdi Chenille - Sandals - Men Nike Sandals online on YOOX United Kingdom - 11545258XIGiorgio Fabiani Ankle Boot - Women Giorgio Fabiani Ankle Boots online on YOOX United Kingdom - 11468756VG , ladies Skechers Hot Pink Women's Sneakers Crazy Price, Birmingham , mens/womens Calvin Klein Hailey Heels modernDune London ESCAPE - TrainersTed Baker KEELIA - MulesPajar GASPER - Winter bootsKenneth Cole New York Take FiveJordan ULTRA FLY 3 - Basketball shoes - black/white/redONLY SHOES ONLBRIGHT BOOTIE - Classic ankle boots Colour: blackJoma TOP FLEX TURF - Astro turf trainers Colour: black , Men/Women Rocket Dog Twinsy Clogs & Mules Price reduction , men/women Pikolinos Cadaques W8K-0829 Sandals a lot of varietiesKennel + Schmenger NOA - Boots Colour: schwarzHogan Loafers - Women Hogan Loafers online on YOOX United Kingdom - 11540038NS , Santoni Loafers - Men Santoni Loafers online on YOOX United Kingdom - 11410283UK , man/woman Circus by Sam Edelman Bev Sandals Clever and practicalBottega Veneta Loafers - Men Bottega Veneta Loafers online on YOOX United Kingdom - 11228983AIChiara Ferragni Sandals - Women Chiara Ferragni Sandals online on YOOX United Kingdom - 11552123XHPantofola D'oro Loafers - Men Pantofola D'oro Loafers online on YOOX United Kingdom - 11569883VKiwSg9bF8 Bottega Veneta San Crispino OxfordI8N5c7VJ SOTOALTO Flow SHOES FOR WOMENBig clearance sale PARC City Boot Riverdale , King of the crowd etnies Scout YBNaturalizer Dane Don the Dame for a look that's anything but subtlewoman Giuseppe Zanotti Color Block Sandals Cheaper than the price , WOMENS Jimmy Choo Natural Nina Platforms wear-resistant ,
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.