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.Fiorifrancesi Ankle Boot - Women Fiorifrancesi Ankle Boots online on YOOX United Kingdom - 11522107LD , SKECHERS Performance Go Walk Lite Floret , SOTOALTO Bestia PLATFORM SHOES FOR WOMENNIKE 828403-504 LOW-TOP TRAINERS FOR WOMENIsabel Marant Beige Bekett Suede Wedge Sneaker Sneakers , Rick Owens X Adidas Boots - Men Rick Owens X Adidas Boots online on YOOX United Kingdom - 11406435QI , Joan & David Black M Leather Very Good Condition Sandals , MARIA MARE 66035 Suedi Negro SANDALIA PLANA DE MUJER , men's/women's Geox WAMINTAABX1 Boots Diverse new designmen's/women's Touch Ups Mercury Heels cheapmens/womens ara Nisha Heels Excellent stretchingmen/women Tabitha Simmons Connie Fly Spark Heels Good qualitymens/womens Steve Madden Fokus Sneakers & Athletic Steve Madden Selling new products , Nike Performance METCON 4 - Sports shoes - universal red/black/white , Veja Sneakers - Women Veja Sneakers online on YOOX United Kingdom - 11419666LGFormentini Court - Women Formentini Courts online on YOOX United Kingdom - 11479320UUCamper Sandals - Women Camper Sandals online on YOOX United Kingdom - 11339877XK , Spaziomoda Sandals - Women Spaziomoda Sandals online on YOOX United Kingdom - 11572841KM , Nina Ricci Sandals - Women Nina Ricci Sandals online on YOOX United Kingdom - 11540434VHArezzo Ballet Flats - Women Arezzo Ballet Flats online on YOOX United Kingdom - 11576651ONF.Lli Bruglia Court - Women F.Lli Bruglia Courts online on YOOX United Kingdom - 11408305MLWOMEN Fendi Formal Shoes official website , jZ18GjzN Carhartt CMP1100 11" Wellington Bootfor you to choose Josef Seibel Sienna 91classic style Cobian Nias BouncePrimary quality Reebok Work BeamerJimmy Choo Gold Tina 65 Leather Stud Caged Heels Sandals , MISS SENSO Leopard Sneakers Easy to clean surfaceLadies ALAÏA Black Cutout Karung Sandals Customer firstwoman Manolo Blahnik Burgundy Wine Sandals Rich design ,
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.