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.Avec Modération Open-Toe Mules - Women Avec Modération Open-Toe Mules online on YOOX United Kingdom - 11469335EBRoberto Del Carlo Sandals - Women Roberto Del Carlo Sandals online on YOOX United Kingdom - 44772027EOAdidas Originals Stan Smith - Sneakers - Men Adidas Originals Sneakers online on YOOX United Kingdom - 11451549PAAsics Black Grey Mint Sz. New In Box Gel Fit Tempo Sneakers SneakersCarolina Hauler Lo 6" Waterproof Composite Toe CA6531 , ladies Christian Louboutin Tan Exagona Platforms Comfortable touch , lady Tory Burch Metallic Bronze Sandals Optimal price , women ALAÏA Nude Bombe Sandals Good worldwide reputationKINOA 36n761 Negro FASHION FOOTWEAR FOR WOMENwoman Stuart Weitzman Black 3w46036 Pumps Nice , Pier One High-top trainers - black , Gardenia DUBLIN - Cowboy/Biker boots Colour: green , Fila CONTROL - Sports shoes - dress blue , Steve Madden EDITT - High heeled ankle boots , man/woman Shoreline sliders , black, Quiksilver Shoes High-qualitymen/women French Sole Gumdrop Heels Clever and practicalWalker west wedge sandals , tan, Pepe JeansNew Look Wide Fit WIDE FIT VAMSTER - High heeled sandals Colour: goldJimmy Choo Sneakers - Men Jimmy Choo Sneakers online on YOOX United Kingdom - 11463691RL , Cafènoir Sneakers - Women Cafènoir Sneakers online on YOOX United Kingdom - 11406919XG , Geox Sneakers - Women Geox Sneakers online on YOOX United Kingdom - 11383217PMArtselab Sneakers - Women Artselab Sneakers online on YOOX United Kingdom - 11555193ETHogan Rebel Sneakers - Women Hogan Rebel Sneakers online on YOOX United Kingdom - 11539804UAMissoni Open-Toe Mules - Women Missoni Open-Toe Mules online on YOOX United Kingdom - 11424770CM , Bibi Lou Sandals - Women Bibi Lou Sandals online on YOOX United Kingdom - 11347110NM , Reliable performance adidas Originals Superstar WBotkier Jessie Step into fun and flirt with these Botkier Jessie Sandal , Women's Prada Gray Suede Platforms A balance between toughness and hardness , Ladies Givenchy Fushia Jelly Sandals A balance between toughness and hardnessWomen's Bally Red Axien Sneaker Sneakers Unique ,
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.