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.The Seller Ankle Boot - Women The Seller Ankle Boots online on YOOX United Kingdom - 11519832UKDolce & Gabbana Court - Women Dolce & Gabbana Courts online on YOOX United Kingdom - 11353735SS , Roberto Della Croce Sneakers - Women Roberto Della Croce Sneakers online on YOOX United Kingdom - 11460225WUBase London Boots - Men Base London Boots online on YOOX United Kingdom - 11506917GQTod's Ankle Boot - Women Tod's Ankle Boots online on YOOX United Kingdom - 11534523JP , PORRONET 2412 SANDALIA PLANA DE MUJER , STROVER 62471 FASHION FOOTWEAR FOR WOMENTRUE HEART S021805234bsj BOTA OUTDOOR PARA MUJER , LADY Manolo Blahnik Sandals Economical and practical , Superstar trainers , black/white, Adidas OriginalsBlundstone Classic ankle boots Colour: tan , man/woman Old Gringo Mabel Clogs & Mules Clearance salemens/womens Camper TWS - K200598 Heels Moderate cost , Prada Court - Women Prada Courts online on YOOX United Kingdom - 44870893QR , Adidas le coq sportif QUARTZ - Trainers - classic blue/vintage red , Crime London Sneakers - Men Crime London Sneakers online on YOOX United Kingdom - 11498920DH , Puma Sneakers - Women Puma Sneakers online on YOOX United Kingdom - 11497164DLL'artigiana Viareggina Loafers - Women L'artigiana Viareggina Loafers online on YOOX United Kingdom - 11529289QAFrancesco Milano Boots - Women Francesco Milano Boots online on YOOX United Kingdom - 11498613KU , Imac Ankle Boot - Women Imac Ankle Boots online on YOOX United Kingdom - 11551545WK , Diadora Heritage Sneakers - Women Diadora Heritage Sneakers online on YOOX United Kingdom - 11328331XNLeather Crown Sneakers - Men Leather Crown Sneakers online on YOOX United Kingdom - 11500766OLBrand feast Sol Sana Xavier HeelClever and practical Spring Step TresnaSales online store Steve Madden Tasken , Reebok Black and Grey Hayasu In Silver Sneakers , WOMENS Candie's Mint Green Wedges a great variety , Ladies Nike Womens Presto New Sneakers shopping onlineWomen's Tory Burch Royal Tan Sandals Excellent features , women Valentino Red Leather Floral Sandals diversity ,
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.