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.Le Stelle Ankle Boot - Women Le Stelle Ankle Boots online on YOOX United Kingdom - 11450639XV , Roda At The Beach Sneakers - Men Roda At The Beach Sneakers online on YOOX United Kingdom - 11560774UMWOMEN Versus Versace Black Fsd450p Sandals Bright colorsHISPANITAS Hi-88017 FASHION ANKLE BOOTS FOR WOMEN , CLARKS Clarkdale Arlo BOTíN PLANO DE MUJERman/woman Gabor Gabor 82.823 Heels Best-selling worldwide , man/woman Vaneli Begonia Sandals Medium costMen/Women G.H. Bass & Co. Howard Loafers Perfect processingAdidas Steve Madden ZELA - Trainers - yellow/white , Be Natural WIDE FIT - Platform sandals Colour: rose , Men/Women Bogs Rio Sandal Stripe Sandals Breathable shoesman/woman Nine West Gazookery Flats Tide shoes list , man/woman Merrell Sunstone Strap Sandals Diverse new designmen's/women's El Naturalista Mola N5033 Heels Beautiful appearanceJoshua*S Sneakers - Men Joshua*S Sneakers online on YOOX United Kingdom - 11521273JT , Aigle Boots - Men Aigle Boots online on YOOX United Kingdom - 11477541RLPrimabase Sneakers - Men Primabase Sneakers online on YOOX United Kingdom - 11486494BVMammut ULTIMATE PRO LOW GTX MEN - Hiking shoes Colour: black , Daniele Alessandrini Loafers - Men Daniele Alessandrini Loafers online on YOOX United Kingdom - 11363400CWSaint Laurent Sneakers - Men Saint Laurent Sneakers online on YOOX United Kingdom - 11462181KQ , Marsèll Sneakers - Women Marsèll Sneakers online on YOOX United Kingdom - 11543030BD , Maritan G Sneakers - Women Maritan G Sneakers online on YOOX United Kingdom - 11499096JQ , Giuseppe Zanotti Sneakers - Women Giuseppe Zanotti Sneakers online on YOOX United Kingdom - 11386384EANike Pink Flex Fury Running Sneakers , Highly appreciated and widely trusted in and out Dirty Laundry Tycen Canvas , Comfortable touch adidas Running Edge LuxInnovative design Pelle Moda Radley , Exquisite processing PUMA Safety Elevateladies Vince Blue Villaire Espadrille Sandals Cheap idealJoshua Sanders Black Felt Bow Sneakers Sneakers ,
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.