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.Roberto Del Carlo Sandals - Women Roberto Del Carlo Sandals online on YOOX United Kingdom - 11424615AS , Roberto Cavalli Sandals - Women Roberto Cavalli Sandals online on YOOX United Kingdom - 11478482FJ , LACOSTE 36caw0034-lacoste LOW-TOP TRAINERS FOR WOMENRoger Vivier Green Metallic Mate-leather Pumps , UP TO YOU 71w0413 Negro FASHION LOAFERS FOR WOMEN , Nike Roshe One Limited Ed Color New SneakersMISS Air Jordan 6 Retro Sneakers Call firstmen's/women's Tommy Hilfiger Cages Sandals Sales Italy , Miss leather ankle boots , black, Kickersman/woman Pelle Moda Nora Heels fineMen/Women Ivanka Trump Una Heels ExportAdidas Minelli Slip-ons - noirCandice Cooper ROCK SPORT - Trainers , Hogan Sneakers - Women Hogan Sneakers online on YOOX United Kingdom - 11567533QNBuscemi Sneakers - Men Buscemi Sneakers online on YOOX United Kingdom - 11200566HJLumberjack Boots - Men Lumberjack Boots online on YOOX United Kingdom - 11320955VB , adidas Performance TERREX SWIFT R2 - Trail running shoes - coren black , Chocolà Court - Women Chocolà Courts online on YOOX United Kingdom - 11541159DJPokemaoke Sandals - Women Pokemaoke Sandals online on YOOX United Kingdom - 11570565NSFitflop Sandals - Women Fitflop Sandals online on YOOX United Kingdom - 11349870SXMiista Ankle Boot - Women Miista Ankle Boots online on YOOX United Kingdom - 11374366WMLe Silla Sandals - Women Le Silla Sandals online on YOOX United Kingdom - 11408542FDChiara Ferragni Sneakers - Women Chiara Ferragni Sneakers online on YOOX United Kingdom - 11227860LHBrunello Cucinelli Boots - Men Brunello Cucinelli Boots online on YOOX United Kingdom - 11505002CI , durable Irish Setter Wingshooter 808Year-end sale Sanita Professional MoonflowerWomen's Carlos by Carlos Santana Wedges Elegant and robust packaging , Stuart Weitzman Multicolored New Python Print Slingback Sandals , woman Maison Margiela Brown Shoes-2369 Sandals quality QueenVia Spiga Brown Strappy Suede Sz. Sandals ,
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.