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.Windsor Smith Ankle Boot - Women Windsor Smith Ankle Boots online on YOOX United Kingdom - 11456300FPJohn Galliano Ballet Flats - Women John Galliano Ballet Flats online on YOOX United Kingdom - 11516527EIRuco Line Sneakers - Women Ruco Line Sneakers online on YOOX United Kingdom - 44991020CT , Laura Biagiotti Boots - Women Laura Biagiotti Boots online on YOOX United Kingdom - 11504428PS , Tommy Hilfiger Black With Bow SandalszkOpGy2Z man/woman Bella-Vita Fonda Heels fashionConverse Chuck Taylor All Star - Combat Zone Street Midwoman Prada Navy Suede Bow Pumps Crazy Price, Birmingham , AMARPIES Akt9824 Marron ZAPATO PLANO PARA MUJERman/woman Nine West Katherine Heels Sufficient supply , Shepherd KARITA - Platform boots Colour: blackConverse Jack Purcell? LP Metallic Leather Oxmen/women Hispanitas Lourdes Boots special promotion , RIVIERAS CLASSIC - Slip-ons Colour: greyALDO PALENG - Trainers Colour: white74097 pallaru h canvas high-top trainers , grey, Palladium , Polo Ralph Lauren SHERWIN - Trainers Colour: classic winemen's/women's Rieker 608X3 Regina X3 Sandals Preferred material , men's/women's Ted Baker Miylan 3 Boots Pleasant appearanceDoucal's Loafers - Men Doucal's Loafers online on YOOX United Kingdom - 11502100GF , men's/women's GUESS Zella Sneakers & Athletic GUESS Contrary to the same paragraph , Primadonna Boots - Women Primadonna Boots online on YOOX United Kingdom - 11496011CDEspadrilles Sandals - Women Espadrilles Sandals online on YOOX United Kingdom - 11424731WR , Swamp Loafers - Women Swamp Loafers online on YOOX United Kingdom - 11186029BX , Prada Boots - Women Prada Boots online on YOOX United Kingdom - 44813413BH , adidas Grey and Orange Traxion Sneakers , Jimmy Choo Joni Bubblegum Slides Sandals , Ladies Skechers Black Red Gold Wedges High quality and cheapErmenegildo Zegna White Men Low Top Sneaker Sneakerswomen 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.