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.Steve Madden Open-Toe Mules - Women Steve Madden Open-Toe Mules online on YOOX United Kingdom - 11467305QVSam Edelman Ankle Boot - Women Sam Edelman Ankle Boots online on YOOX United Kingdom - 11301941JX , Mephisto Bronze and Pink Snakeskin Sydel Strap Slide On SandalsGentle Souls by Kenneth Cole Buckled UpMizuno Wave Rider 20 Jr (Little Kid/Big Kid) , L'INTERVALLE MANCHESTER - Classic ankle bootsKeds Double Decker MLB Giants Jersey , Evans WIDE FIT 2 PART WEDGE - Platform sandals , Men/Women River Island Pool sliders Fine wildAdidas Office MIRANDA - Classic heels - black , Pepe Jeans JAYKER - Trainers - brownmens/womens Indigo Rd. Helga Flats Practical and economical , Pompeya w9t leather ankle boots , brown, PikolinosEcashine leather ankle boots , black, Mellow Yellow , Barleycorn Loafers - Men Barleycorn Loafers online on YOOX United Kingdom - 11504956TPMckanty Loafers - Men Mckanty Loafers online on YOOX United Kingdom - 11536060TCDel Toro Boots - Men Del Toro Boots online on YOOX United Kingdom - 11560025JQCourrèges Sneakers - Women Courrèges Sneakers online on YOOX United Kingdom - 44977459VF , Ixos Loafers - Women Ixos Loafers online on YOOX United Kingdom - 11544721QU , Jeannot Sandals - Women Jeannot Sandals online on YOOX United Kingdom - 11548455CS , Angela George Boots - Women Angela George Boots online on YOOX United Kingdom - 11544108UGRoberto Festa Court - Women Roberto Festa Courts online on YOOX United Kingdom - 11134688OQ , gODhctkK woman Nike Silver Sneakers wear-resistantlow cost New Balance MC696v3ladies Tory Burch Tan Soohie Wedges First class in his class , Women's Tory Burch Sand 'zoey' Sandals Known for its excellent quality , Paul Green Smoke Mettalic Cosmo Peep Toe Bootie 7.5au Sandals , Ladies swedish hasbeens White Clogs Sandals Guarantee quality and quantityIsabel Marant Burgundy Calf Velvet/ Lamb Leather SneakersLadies Brooks Brothers Blue Spectator Sandals trendy ,
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.