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.Gianna Meliani Ankle Boot - Women Gianna Meliani Ankle Boots online on YOOX United Kingdom - 11507291KJDondup Ankle Boot - Women Dondup Ankle Boots online on YOOX United Kingdom - 11522945ECBottega Veneta Dodger II Slip-On SneakerXTI 47610 PLATFORM ESPADRILLES FOR WOMEN , OTAZUA 691090 WEDGE-HEEL SANDALS FOR WOMENFLUCHOS 208 CASUAL SHOES FOR MAN , Reebok Cl Lthr Mid Gtx-Thin - Sneakers - Men Reebok Sneakers online on YOOX United Kingdom - 11384356JSMISS Cole Haan Blue Milly Wedges Moderate priceREFRESH 63658 C Negro SHOES FOR WOMENNike Grey Pink Fly Knit 4.0 SneakersLadies Guess Silver Formal Shoes Big saleWomen's Burberry Yellow/White Espadrilles Wedges Elegant appearancewomen Walter Steiger Black Platforms packaging diversity , WOMEN Merona Brown Elliana Sandals Special functionmens/womens Nine West Knowone Boots Aesthetic appearance , Adidas Marc O'Polo Mules - silver , U box c suede leather trainers , navy blue, Geox , Adidas Dune London ASPIRATION - High heels - teal , Lacoste STRAIGHTSET INSULAC - High-top trainers - tan/dark brownTomawok leather loafers , black, Les Tropeziennes Par M.BelarbiFiorangelo Court - Women Fiorangelo Courts online on YOOX United Kingdom - 11448241JF , Cult Loafers - Women Cult Loafers online on YOOX United Kingdom - 11473304UXNike Sportswear AIR FORCE 1 07 - Trainers - red crush/sail , mens/womens Soludos Perforated Slip-On Sneaker Sneakers & Athletic Soludos High-qualitymens/womens ASICS Gel-Fit Yui 2 Sneakers & Athletic ASICS The highest quality materialJohn Galliano Sneakers - Women John Galliano Sneakers online on YOOX United Kingdom - 11516637PCHermès Pink Night 70 Slingback SandalsSaint Laurent Black Blue and White Wolly Soft/ Proust Blue/ Nero SneakersNike Purple White Women Air Max Thea Ultra Fk Running Sneakers , lady Dansko Tan Leather Comfort Sandals The color is very noticeable ,
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.