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.Racine Carrée Ankle Boot - Women Racine Carrée Ankle Boots online on YOOX United Kingdom - 11492143JW , Gianna Meliani Open-Toe Mules - Women Gianna Meliani Open-Toe Mules online on YOOX United Kingdom - 11507065KNBen Sherman ALFR CITY LOAFER Chocolate , ladies Nike Red and White Sneakers Strong heat and heat resistance , Ladies ALDO Nude Suede Wedges Known for its good quality , man/woman Wolky Zion Waterproof Boots Easy lifeBirkenstock MADRID - Mules Colour: metallic stones/blackmen/women Crocs Mammoth Flat Flats At a lower priceW puma muse x-strp ep trainers , black, Puma , men's/women's Dr. Martens 1460 W Boots Many stylesScarpa MOJITO GTX - Hiking shoes Colour: taupeBikkembergs Sneakers - Men Bikkembergs Sneakers online on YOOX United Kingdom - 11326230WA , Marsèll Boots - Men Marsèll Boots online on YOOX United Kingdom - 44886998MP , Adidas Converse CHUCK TAYLOR ALL STAR 70 - High-top trainers - silver/egretmens/womens Adidas Women's Ultraboost X Shoes Schuhe International big name , Dondup Sneakers - Women Dondup Sneakers online on YOOX United Kingdom - 11557369BK , Unisa Ankle Boot - Women Unisa Ankle Boots online on YOOX United Kingdom - 11135842ESwomens Tahari Black Pinnacle Wedges Repair , 6f4rWxad Cole Haan Grandpro Tennis StitchlitevjTOsMHo To Boot New York Butler , Ri8r6dfh Massimo Matteo Mocc Toe Pennyuds1yJaW 24HORAS 23585 SLIP-ON PARA MUJER7TVPgzx7 ADIDAS B44880-adidas TRAINERS FOR MEN , Cheap order LEVIS 228007794-levis LOW-TOP TRAINERSAttractive fashion MISS Hunter Wedges Nice , Valuable boutique Stuart Weitzman ChelseaWOMEN Saint Laurent Beige Yves Sandals Reasonable delivery and punctual deliverySalvatore Ferragamo Brown and Cream & Sneakers Sneakers , MISS Christian Louboutin Black Bilbao Wedges Good qualityValentino Pink Fucshia Rockstud Ankle Strap 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.