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.Juli Pascal Paris Sandals - Women Juli Pascal Paris Sandals online on YOOX United Kingdom - 11455357KD , L' Autre Chose Sandals - Women L' Autre Chose Sandals online on YOOX United Kingdom - 11577465SB , V Italia Sandals - Women V Italia Sandals online on YOOX United Kingdom - 11171172FGMaritan G Sneakers - Women Maritan G Sneakers online on YOOX United Kingdom - 11493442QL , IMAC 208177 FASHION BOOTS FOR WOMENChon Per Mario Zamagna Sandals - Women Chon Per Mario Zamagna Sandals online on YOOX United Kingdom - 11548752HKTipe E Tacchi Ankle Boot - Women Tipe E Tacchi Ankle Boots online on YOOX United Kingdom - 11517447TM , Adidas By Raf Simons Sneakers - Men Adidas By Raf Simons Sneakers online on YOOX United Kingdom - 11566755IG , ALMA EN PENA 17481 FASHION FOOTWEAR FOR WOMENZALIAN 69861 Marino FASHION BALLERINAS FOR WOMENlady Joie Black Kidmore Sneakers special purchaseHavaianas FLASH URBAN - Pool shoesadidas Originals | adidas Originals Deerupt Sneakers In White B41767Lowa TIBET GTX WXL - Climbing shoes - sepia/schwarz , man/woman Havaianas Top Tiras Flip-Flops Sandals best sellerBark Sneakers - Men Bark Sneakers online on YOOX United Kingdom - 11129153OINike SB ZOOM STEFAN JANOSKI - Slip-ons - black/gunsmoke/light brownmens/womens Etro Fringe Bootie Boots As of the latest model , Vivienne Westwood Loafers - Men Vivienne Westwood Loafers online on YOOX United Kingdom - 11517500RPIcône Court - Women Icône Courts online on YOOX United Kingdom - 11185150KJ , Cuplé Sandals - Women Cuplé Sandals online on YOOX United Kingdom - 11451196TA , Philippe Model Sneakers - Women Philippe Model Sneakers online on YOOX United Kingdom - 11562641IOElena Iachi Sneakers - Women Elena Iachi Sneakers online on YOOX United Kingdom - 11570996WK , Loretta Pettinari Sandals - Women Loretta Pettinari Sandals online on YOOX United Kingdom - 11564752FDWbW67Wwt NIKE Aj3490-002 TRAINERS FOR MENFashion versatile shoes Soludos Smoking Slipper Embroidery , Quality and consumer first Lilly Pulitzer McKim SandalExquisite processing Frye Veronica BootieBloch Phantom Phantom slinks across the dance floor with style and grace! , OluKai Hoe A true creature of comfort, the OluKai Hoe sandal is unmatched in its high level of craft and attention to detail! ,
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.