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.Brunello Cucinelli Loafers - Women Brunello Cucinelli Loafers online on YOOX United Kingdom - 11488195MS , Moon Boot Pulse Nylon Plus Wp - Ankle Boot - Women Moon Boot Ankle Boots online on YOOX United Kingdom - 11440574PHWomen's Prada Cipria 3x5844 Sandals Elegant and stable packaging , Mango DUNA 1 - High heels Colour: black , men/women Sixtyseven Mules reasonable pricePier One Moccasins - dark bluePretty Ballerinas RON - Mules Colour: blackCTWLK TOPAZ - T-bar sandals Colour: denimmen's/women's PATRIZIA Vigorous Boots Reliable performance , Geox ASHEELY - Ankle boots , New Look KACEY - Ankle strap ballet pumps Colour: white , Men/Women Free People Moonlight Heel Boot Boots Good designmen's/women's ALDO Cadydia Clogs & Mules In short supply , H by Hudson AMPTHILL - Trainers - mintGrenson Boots - Men Grenson Boots online on YOOX United Kingdom - 11178548MNElia Maurizi Sneakers - Men Elia Maurizi Sneakers online on YOOX United Kingdom - 11577214LLGiuseppe Zanotti Sneakers - Men Giuseppe Zanotti Sneakers online on YOOX United Kingdom - 11545477MT , Prada Sport Sneakers - Men Prada Sport Sneakers online on YOOX United Kingdom - 11560012WH , O.X.S. Boots - Women O.X.S. Boots online on YOOX United Kingdom - 11314607WM , El Campero Boots - Women El Campero Boots online on YOOX United Kingdom - 11546637PJSam Edelman Court - Women Sam Edelman Courts online on YOOX United Kingdom - 11466113BBPrada Ankle Boot - Women Prada Ankle Boots online on YOOX United Kingdom - 11210918CVRick Owens Sneakers - Men Rick Owens Sneakers online on YOOX United Kingdom - 11396393ES , adidas White Sneakers Tennis 37.5 Sneakers1dkqjTls Charlotte Olympia HG Bootie MLTSTrbyoMUlI women E Sneakers official websiteSNg28nh0 women Sperry Sneakers High-quality materialsClearance sale M&F Western Bonnie , ladies Pelle Moda Metallic Flirt Platforms Highly appreciated and widely trusted in and outwoman Tory Burch Tan Gladiator Sandals Complete specification area ,
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.