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.Agile By Rucoline Sneakers - Women Agile By Rucoline Sneakers online on YOOX United Kingdom - 11496667MNElisabetta Franchi Ballet Flats - Women Elisabetta Franchi Ballet Flats online on YOOX United Kingdom - 11244047XC , F.Lli Bruglia Ankle Boot - Women F.Lli Bruglia Ankle Boots online on YOOX United Kingdom - 11525495EA , Rick Owens Ankle Boot - Women Rick Owens Ankle Boots online on YOOX United Kingdom - 11512886FTman/woman Easy Spirit Hugs 3 Sneakers & Athletic Easy Spirit Adequate supply and timely deliveryNike Air Pegasus A/T - Sneakers - Men Nike Sneakers online on YOOX United Kingdom - 11431459KM , Puma Suede Classic Bboy Fabulous - Sneakers - Men Puma Sneakers online on YOOX United Kingdom - 11444673VUwomens Fendi Navy 123 Wedges First in his class , JOHN SMITH Rixon 17i Negro-rosa TRAINERS FOR WOMEN , WOMEN Delman Sand Darci Sandals Carefully selected materialsmen/women Arche Drick Heels high quality productAdidas Bronx Trainers - offwhite/turquoise/yellow , Jeffrey Campbell HAZARD - High heeled ankle boots Colour: black/multicolor , Lost Ink TERI V FRONT COURT - High heels , Adidas New Balance WRL247 - Trainers - purple , man/woman Alice + Olivia Liberty Heels Elegant shape , Fila Sneakers - Men Fila Sneakers online on YOOX United Kingdom - 11582969RVadidas Performance QUESTAR RIDE - Neutral running shoes - scarlet/core black/hi-res red , Men/Women Rieker R3443 Liv 43 Sneakers & Athletic Rieker CharacteristicsNike Performance MERCURIAL SUPERFLYX 6 CLUB NJR TF - Astro turf trainers - amarillo/white/black , Jfk Boots - Women Jfk Boots online on YOOX United Kingdom - 11546427NNVans Sneakers - Women Vans Sneakers online on YOOX United Kingdom - 11477605XRLerre Court - Women Lerre Courts online on YOOX United Kingdom - 11168862SB , Kudetà Ballet Flats - Women Kudetà Ballet Flats online on YOOX United Kingdom - 11068000JH , Soisire Soiebleu Sneakers - Women Soisire Soiebleu Sneakers online on YOOX United Kingdom - 11067094JP , Love Moschino Sandals - Women Love Moschino Sandals online on YOOX United Kingdom - 11326333RK , Mjus Ankle Boot - Women Mjus Ankle Boots online on YOOX United Kingdom - 11485626TG , Fine workmanship Stacy Adams TinsleyArche Barwol Get a bold look the modern and minimal Barwol boot from ArcheWomen's Fendi Black 15005556 Formal Shoes Excellent performance ,
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.