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.Nero Giardini Ankle Boot - Women Nero Giardini Ankle Boots online on YOOX United Kingdom - 11489100MCToga Pulla Ankle Boot - Women Toga Pulla Ankle Boots online on YOOX United Kingdom - 11526674HM , Pedro García Flip Flops - Women Pedro García Flip Flops online on YOOX United Kingdom - 11573744UATosca Blu Shoes Sneakers - Women Tosca Blu Shoes Sneakers online on YOOX United Kingdom - 11571662CODel Carlo Sandals - Women Del Carlo Sandals online on YOOX United Kingdom - 11356692FB , Ladies Valentino Black Platform Pumps quality , Ladies Nike 685225-100 Sneakers Beautiful design , ladies Sperry Black Sneakers Excellent performanceAlma En Pena. Flip Flops - Women Alma En Pena. Flip Flops online on YOOX United Kingdom - 11503587TFSenso Jemma I Patent Nude - Sandals - Women Senso Sandals online on YOOX United Kingdom - 11457645VGmens/womens KIOMI High heeled sandals Won highly appreciated and widely trusted at home and abroad , YOKONO Siena 012 Negro FASHION ANKLE BOOTS FOR WOMEN , Women's Tory Burch Pewter Filipa Wedges For sale , ARCHE Barway ZAPATO DE CU?A PARA MUJERRiver Island Wide Fit High heels Colour: nude , men/women See by Chloe SB24200 Heels fashion , mens/womens Billabong Secret Treasurz Sandals Outstanding function , Mango ROMY - Ballet pumps Colour: pink , men's/women's Kamik Bailee Boots Excellent performanceAdidas New Balance WL574 - Trainers - greymens/womens ASICS Gel-Quantum 360 CM Sneakers & Athletic ASICS Complete specifications , Elata Sandals - Women Elata Sandals online on YOOX United Kingdom - 11506376ON , Garrice Ankle Boot - Women Garrice Ankle Boots online on YOOX United Kingdom - 11559764XQ , Giuseppe Zanotti Sneakers - Women Giuseppe Zanotti Sneakers online on YOOX United Kingdom - 45423723IIPaul Andrew Court - Women Paul Andrew Courts online on YOOX United Kingdom - 11554164LXLoretta Pettinari Loafers - Women Loretta Pettinari Loafers online on YOOX United Kingdom - 11496210RJGivenchy Black Calfskin Chain Link Sandals , First batch of customers Danner Acadia® 8"Quality queen Sperry Wahoo SandalMunro Kaya Complete your casual look with the Kaya, a cute summer sandal loaded with comfort features ,
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.