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.Paloma Barceló Ankle Boot - Women Paloma Barceló Ankle Boots online on YOOX United Kingdom - 11515673NHMercante Di Fiori Sandals - Women Mercante Di Fiori Sandals online on YOOX United Kingdom - 11340038GI , Carhartt Lightweight Work Hiker Steel Toe , CARLOS by Carlos Santana 1960 M , SOTOALTO Runstret LOW-TOP TRAINERS FOR WOMENYOKONO Genova 071 Kaki SANDALIA PLANA DE MUJERlady Blackmilk Black Jovy-anne Platforms Optimal pricePepen Sole Classic ankle boots , Gentle Souls by Kenneth Cole Percyadidas Originals NMD CS2 - Trainers - blue/grey/gummen/women Jonak NALA - Boots special promotion , men's/women's ECCO Babett Sandal Strap Slide Sandals online salemens/womens ASICS FuzeX? Sneakers & Athletic ASICS best sellermens/womens Mustang Trainers - mittelbraun Shoes durableman/woman Schutz Mules Colour: new sunshine wholesalemtng JAKE - Trainers - pila black , Ancarani Court - Women Ancarani Courts online on YOOX United Kingdom - 11517430ENDsquared2 Sneakers - Men Dsquared2 Sneakers online on YOOX United Kingdom - 11399723QP , Pony Sneakers - Men Pony Sneakers online on YOOX United Kingdom - 11583789XOAmiri Boots - Men Amiri Boots online on YOOX United Kingdom - 11487101KI , Kenneth Cole New York ROY BOOT - Classic ankle boots - black , Lotto STADIO 300 II SG6 - Screw-in stud football boots Colour: blackmen's/women's Think! Menscha - 81756 Boots Has a long reputation , Just Cavalli Sneakers - Men Just Cavalli Sneakers online on YOOX United Kingdom - 11473008FI , Alexander Smith Sneakers - Men Alexander Smith Sneakers online on YOOX United Kingdom - 11554228EULumberjack Sneakers - Women Lumberjack Sneakers online on YOOX United Kingdom - 11441546NBElisabetta Franchi Court - Women Elisabetta Franchi Courts online on YOOX United Kingdom - 44954490ISOnline Rockport TruFlex Mesh Tie , Ariat Pecos The Ariat® Pecos boot provides the ideal combination of a traditional leather construction with updated comfort technology for a truly modern cowboy boot. , woman Valentino Black 001 Platforms Quality first
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.