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.Pierre Balmain Ankle Boot - Women Pierre Balmain Ankle Boots online on YOOX United Kingdom - 44919147UJ , Tipe E Tacchi Court - Women Tipe E Tacchi Courts online on YOOX United Kingdom - 11545649KO , Harrys Of London Loafers - Men Harrys Of London Loafers online on YOOX United Kingdom - 11564410SBAndrea Pinto Loafers - Women Andrea Pinto Loafers online on YOOX United Kingdom - 11497985UPTory Burch Tan Leather Wedges Sandals , CC8RNyJh Men/Women Ryka Marilyn Sandals CharacteristicsGcds _Wh, Sabot 01 White - Ankle Boot - Women Gcds Ankle Boots online on YOOX United Kingdom - 11470257CFPAR Y MEDIO Kiowa Parymedio De Piel Cua FASHION LOAFERS FOR WOMENWOMEN Tory Burch Gold Abitha Sandals First in his classBernie Mev Black and Silver O Sandals , Puma SUEDE PLATFORM TRACE - Trainers , SKECHERS Performance Go Walk Joy - 15609 , men/women Hispanitas Sharlot Heels Various styles , man/woman J. Renee Sattuck Heels buy , men's/women's Frye Molly Gore Tall Boots retail pricemen's/women's Think! Julia - 89332 Sandals First qualityHogan Sneakers - Women Hogan Sneakers online on YOOX United Kingdom - 11299144DKHogan Sneakers - Women Hogan Sneakers online on YOOX United Kingdom - 11567593WV , Men/Women SAS Crissy Flats Let our goods go to the world , Raquel Perez® Boots - Men Raquel Perez® Boots online on YOOX United Kingdom - 11503650NDBallin Boots - Women Ballin Boots online on YOOX United Kingdom - 11556342LP , Rochas Ankle Boot - Women Rochas Ankle Boots online on YOOX United Kingdom - 11543702CUChiara Ferragni Loafers - Women Chiara Ferragni Loafers online on YOOX United Kingdom - 11339696TJ , MvRjgMJC The North Face ThermoBall™ LiftyC2jwu9Xc SKECHERS Performance Vibe Ultra Karma , taT9yajK Jack Rogers Emmett Waterproof Loafer , ALDO Uneriri With a monochromatic palette and classic silhouette, the ALDO Vendetti sneaker is an easy choicewomen Gianvito Rossi Navy Blue Wedges a good reputation in the worldLADY Salvatore Ferragamo Multi Color Sandals Reliable quality , Prada Black Suede High Top Sneakers 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.