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.Roger Vivier Ankle Boot - Women Roger Vivier Ankle Boots online on YOOX United Kingdom - 11501705KCSergio Rossi Ankle Boot - Women Sergio Rossi Ankle Boots online on YOOX United Kingdom - 11526159OR , Marie Marí Ankle Boot - Women Marie Marí Ankle Boots online on YOOX United Kingdom - 11482491BO , Atelier Mercadal Court - Women Atelier Mercadal Courts online on YOOX United Kingdom - 11354874HLF.Lli Bruglia Loafers - Women F.Lli Bruglia Loafers online on YOOX United Kingdom - 11518269DDPATRICIA MILLER 1058 SHOES FOR WOMENStuart Weitzman Black Goosebump Nunaked SandalsWomen's Prada Multicolor Sandals Flagship store , Supra HAMMER RUN Black / Whitewomens Steve Madden Brown Aryah Sandals Modern and stylish fashion , woman Ralph Lauren Collection Black Sandals Louis, in detailTOP WAY B040172-b7200 Pink WEDGE-HEEL SANDALS FOR WOMEN , Adidas Carmela Ankle boots - greyecco IRVING - Trainers - black , men/women Franco Sarto Aldrich Boots elegant , Aigle HAVSON - Boat shoes , adidas Performance PUREBOOST - Trainers - core black/dgh solid grey/hiMen/Women Sigerson Morrison Melina Heels Full range of specifications , man/woman Nine West Cardya Heels In short supplymen/women Johnston & Murphy Collins Wingtip Oxfords TRUE , Gaudì Boots - Men Gaudì Boots online on YOOX United Kingdom - 11549670SUmen/women adidas Alphabounce Aramis Sneakers & Athletic adidas Elegant and sturdy packagingCavallini Court - Women Cavallini Courts online on YOOX United Kingdom - 11454399DU , Cuplé Court - Women Cuplé Courts online on YOOX United Kingdom - 11541290UJdVF4OZHo PITILLOS 1273 SHOES FOR WOMEN , Won highly appreciated and widely trusted at home and abroad El Naturalista Stella N5201 , Valentino Black Rockstud Blue Bead Triple Strap Kitten Heel 36 PumpsLadies Balenciaga Sneakers First class in his class , WOMENS Saint Laurent Black 466680 Sandals AffordableWomen's Prada Patent Leather Sandals Cheap ideal ,
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.