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.Stella Mccartney Ankle Boot - Women Stella Mccartney Ankle Boots online on YOOX United Kingdom - 11014236PD , Charme Ankle Boot - Women Charme Ankle Boots online on YOOX United Kingdom - 11454906EMPUMA x BIG SEAN Leadcat Sandals | Ash-Ash | PUMA PUMA x BIG SEAN | PUMA United States , Gianni Renzi® Couture Ankle Boot - Women Gianni Renzi® Couture Ankle Boots online on YOOX United Kingdom - 11455972UK , RIVIERABONUCCI Salones Mujer Piel Ja5501g30-rojo Beige SHOES FOR WOMEN , Steve Madden CARRIE - High heeled bootsNew Look THUNDER MIX RUNNER - Trainersmens/womens Nine West Yadra Heels product qualityman/woman ALDO Eoweladda Oxfords the most economical , Buffalo BELLE - High heelsmen's/women's Aquatalia Stella Clogs & Mules Economical and practicalDsquared2 Sneakers - Men Dsquared2 Sneakers online on YOOX United Kingdom - 11183282ADTod's Sneakers - Men Tod's Sneakers online on YOOX United Kingdom - 11541344EL , Clarks Boots - Men Clarks Boots online on YOOX United Kingdom - 11440813JF , Ted Baker | Ted Baker Black Suede Heeled Ankle Boots with Bow , Adidas Vero Moda VMMANON - Ankle boots - snow whiteMOA - Master of Arts MIKEY PRINTED - Trainers Colour: white , Senso Sandals - Women Senso Sandals online on YOOX United Kingdom - 11384347QG , Guess Sandals - Women Guess Sandals online on YOOX United Kingdom - 11493279NMLuca Valentini Sandals - Women Luca Valentini Sandals online on YOOX United Kingdom - 11106555ENStuart Weitzman Tan Animal Print Sandals , jfh2I1fB WOMENS bebe White Platforms QueenslandVery good color ED Ellen DeGeneres AntonaCole Haan Brown Dorie Nke Air Slip-on Loafers Sneakers Patent Leather Sneakers , woman Jessica Simpson Black Sling Platforms Used in durability , lady Zara Multicolored (1317) Sandals Orders are welcomeWOMEN Off-White™ Black Multi Belt Sandals Reliable performanceFranco Sarto Red Beaded Leather Thong SandalsDolce Vita New Ankle Strap Heeled Sandalsladies Prada Nude Mid-heel Sandals High quality ,
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.