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.Studio Pollini Ankle Boot - Women Studio Pollini Ankle Boots online on YOOX United Kingdom - 11529336IKHunter Womens Org Tall - Boots - Women Hunter Boots online on YOOX United Kingdom - 11182328IG , Chie Mihara Ankle Boot - Women Chie Mihara Ankle Boots online on YOOX United Kingdom - 11350148QQMISS Hermès Taupe Kola Sandals luxuryMISS Burberry Stripes Sandals Elegant and robust packaging , WOMEN Jimmy Choo Metallic Wedges For saleWOMEN adidas White/Purple Sneakers Attractive and durable , Even&Odd Wide Fit High heeled bootsHUGO ALLURE - Classic ankle bootsmens/womens Faith AMORA - Slip-ons First qualitymen's/women's Massimo Matteo Ankle Strap Sandal Flats superiormen's/women's Nine West Masterone Heels Modern and elegantman/woman Tommy Hilfiger Seaside 2 Oxfords Sufficient supplyCtas hi high top trainers , pink, Converse , Lacoste Sneakers - Men Lacoste Sneakers online on YOOX United Kingdom - 11568237BG , Adidas Pepe Jeans GABLE - Trainers - navy blueMd 75 Boots - Men Md 75 Boots online on YOOX United Kingdom - 11285646ECmens/womens Jil Sander Navy JN29122 Sneakers & Athletic Jil Sander Navy Clearance sale , Men/Women Italian Shoemakers Selina Heels Highly praised and appreciated by the consumer audienceMetisse Boots - Women Metisse Boots online on YOOX United Kingdom - 11457062VO , Springa Sneakers - Women Springa Sneakers online on YOOX United Kingdom - 11572511BGQuattrobarradodici Sneakers - Women Quattrobarradodici Sneakers online on YOOX United Kingdom - 11573522XBMaison Margiela Sandals - Women Maison Margiela Sandals online on YOOX United Kingdom - 11114423JVQuality products Globe Dart Lyte XCCobian Leucadia Accent your beach style with the awesome comfort of the Cobian Leucadia sandal!Dansko Oralee You can really see and feel the handcrafted attention to detail with the Dansko Oralee sandal!Schutz Sharon Make your mark this holiday season in the spectacular Schutz Sharon heel!Comfortiva Alora Be the talk of the office when adding the Comfortiva Alora to your ensemble.Christian Louboutin Beige Ivory Gwinee Glitter Metallic Specchio Sandals , FootJoy Black/Brown Premiere Classics Man Golf 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.