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.Luca Grossi Ankle Boot - Women Luca Grossi Ankle Boots online on YOOX United Kingdom - 11524892EMDolce & Gabbana Court - Women Dolce & Gabbana Courts online on YOOX United Kingdom - 11472176UNPuma Defy Wn's - Sneakers - Women Puma Sneakers online on YOOX United Kingdom - 11567237VEAndrea Pinto Court - Women Andrea Pinto Courts online on YOOX United Kingdom - 11502270HKBernie Mev. Sneakers - Women Bernie Mev. Sneakers online on YOOX United Kingdom - 11405175SKVia Vela 14 Sandals - Women Via Vela 14 Sandals online on YOOX United Kingdom - 11386673LLwomen Nike Flyknit Trainer Sneakers Stylish and charming , Men/Women French Connection Corian Boots Year-end salePuma | Puma Phenom Satin Training SneakersL'INTERVALLE RONNIE - Classic heelsmen/women Eileen Fisher Finn 2 Heels Big clearance sale , Globe TILT - Skate shoes - wheat/blackadidas Performance PREDATOR 18.1 FG - Moulded stud football boots - core black/footwear white/red , Carritz Sandals - Women Carritz Sandals online on YOOX United Kingdom - 11480373LRRodo Sandals - Women Rodo Sandals online on YOOX United Kingdom - 11461844IIPertini Sneakers - Women Pertini Sneakers online on YOOX United Kingdom - 11535102PR , Marian Court - Women Marian Courts online on YOOX United Kingdom - 11407779QNL'arianna Court - Women L'arianna Courts online on YOOX United Kingdom - 11465870SO , Scholl Ankle Boot - Women Scholl Ankle Boots online on YOOX United Kingdom - 44892544LL , Casadei Ankle Boot - Women Casadei Ankle Boots online on YOOX United Kingdom - 11529615DK , Canarguez Ankle Boot - Women Canarguez Ankle Boots online on YOOX United Kingdom - 11512514AVChiara Ferragni Loafers - Women Chiara Ferragni Loafers online on YOOX United Kingdom - 11556845IXLPim5H2Q Georgia Boot Georgia Giant Wellington , Acknowledgement feedback La Sportiva Ultra Raptora variety of PARC City Boot CentralOnline Shopping Minnetonka Willow Boot , New Listing Pikolinos Daroca W1U-8682SO , Valentino Beige Red 3d Bow Patent Leather Nude Classic Heel 38 PumpsValentino Blue Rockstud Denim Camustars Camo Star Slip On Sneakers Sneakerswoman Miu Miu Multi Pattern Platforms Characteristic
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.