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.Vic Matiē Ankle Boot - Women Vic Matiē Ankle Boots online on YOOX United Kingdom - 11574018HOAnna F. Flip Flops - Women Anna F. Flip Flops online on YOOX United Kingdom - 11431081HC , Basket Platform Valentine Women's Sneakers | Grey Dawn , PUMA Puma x Han KJ?BENHAVN TSUGI Netfit SneakerPANAMA JACK Piola FASHION ANKLE BOOTS FOR WOMEN , mens/womens Rockport Devona Dalosia Flats First quality , men/women Chinese Laundry Florentine Boots Trendy , Pepe Jeans BIO - Mules , Birkenstock ARIZONA - Mules Colour: port , PUMA Puma x Fenty by Rihanna Chelsea Sneaker Bootmen/women Nanette nanette lepore Korene Boots Fast delivery , Chi Chi London KARINA - Mules Colour: terraHogan Court - Women Hogan Courts online on YOOX United Kingdom - 11133902DACalpierre Loafers - Men Calpierre Loafers online on YOOX United Kingdom - 11579434DF , Puma Sneakers - Men Puma Sneakers online on YOOX United Kingdom - 11486686AX , man/woman adidas Golf Crossknit 2.0 Sneakers & Athletic adidas Golf Attractive fashionNike Performance FREE METCON - Sports shoes - universal red/white/black , men's/women's Saucony Vendetta Sneakers & Athletic Saucony Not so expensiveExe' Boots - Women Exe' Boots online on YOOX United Kingdom - 11529543IRAngel Loafers - Women Angel Loafers online on YOOX United Kingdom - 11546685XWGiancarlo Paoli Sandals - Women Giancarlo Paoli Sandals online on YOOX United Kingdom - 11380270GWCustomer first Indigo Rd. Yasmina2 , Different goods Tommy Hilfiger Bowmanetnies Marana You've endured through multiple rounds and are still swinging. Stand up to the rigors of skateboarding with the durable Marana from Etnies.JqDsKuGT WOMENS Anthropologie Gold Wedges newcomer7GTqkHiP WOMENS Burberry Black/Gold Sandals Queensland , Manolo Blahnik Silver Leather Ankle Wrap Kitten Heels Sandals , women Aquazzura Blue Sexy Thing Sandals Rich on-time deliveryadidas X Yeezy Grey/Gum Bb1840 Boost 750 Sneakers , lady Tod's Brown Buckle Strappy Sandals shopping online ,
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.