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.Fabio Rusconi Ballet Flats - Women Fabio Rusconi Ballet Flats online on YOOX United Kingdom - 11497559RO , Todai Ankle Boot - Women Todai Ankle Boots online on YOOX United Kingdom - 11480397DF , C.DOUX 7457 FASHION FOOTWEAR FOR WOMEN , BMW Motorsport Drift Cat 7 Sneakers | Puma White-Team Blue-PumaWht , Manolo Blahnik Orange Leather Open Toe SandalsSteve Madden JOHANNAH - Classic ankle bootsClarks CALLA ASTER - Ankle boots , Boutique Moschino Ankle Strap Heel with BowDiesel MAGNETE EXPOSURE LOW I - Trainers - graumen's/women's Giuseppe Zanotti I760059 Heels Different styles and styles , Adidas River Island Classic ankle boots - whitePUMA Puma x Fenty by Rihanna Chelsea Sneaker Boot , Men/Women Rieker Slip-ons Colour: rauch Shopping promotionEGO CELIA - High heeled sandals Colour: black , Frye Boots - Men Frye Boots online on YOOX United Kingdom - 11554402UUASICS GEL-QUANTUM 360 KNIT 2 - Neutral running shoes - carbon/dark grey , Men/Women Gola Harrier Nylon Sneakers & Athletic Gola Strong value , Kanna Sandals - Women Kanna Sandals online on YOOX United Kingdom - 11354042DALerre Boots - Women Lerre Boots online on YOOX United Kingdom - 11508765CH , Nike Sneakers - Women Nike Sneakers online on YOOX United Kingdom - 11572769PD , Piampiani Ankle Boot - Women Piampiani Ankle Boots online on YOOX United Kingdom - 11491428AK , Adidas Originals Sneakers - Women Adidas Originals Sneakers online on YOOX United Kingdom - 11411132LSBernie Mev. Court - Women Bernie Mev. Courts online on YOOX United Kingdom - 11564409UD , N° 21 Court - Women N° 21 Courts online on YOOX United Kingdom - 11472734IA , Sam Edelman Court - Women Sam Edelman Courts online on YOOX United Kingdom - 11466030TBModerate cost Klogs Footwear Tiburonflagship store Diadora Maracana 18Cheap order Lowa Tibet GTX , Laredo Stillwater The Laredo Stillwater boot will definitely keep you on the move with its durable leather construction and long-lasting comfort. , White and Green "The King Of Queens" Cruzer 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.