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.Pavin Ankle Boot - Women Pavin Ankle Boots online on YOOX United Kingdom - 11487396SL , BMW M Motorsport Kart Cat III Sneakers | Anthracite-Puma WhiteJ|D Julie Dee Ankle Boot - Women J|D Julie Dee Ankle Boots online on YOOX United Kingdom - 11292873SMRIVA DI MARE Ch-18-015 FASHION SANDALS FOR WOMEN , Giuseppe Zanotti Black Crocodile Hi-top Wedge Sneakers Sneakersadidas Originals NMD_R1 STLT PK - TrainersSupra SKYTOP CLASSIC - High-top trainers Colour: white/redmen's/women's Kamik NewYork 2 Boots Packaging diversityEven&Odd Wide Fit High heeled boots , mens/womens Splendid Dante Boots Maintenance capability , Neosens ROCOCO - Ankle bootsmen/women Steve Madden Classics Clogs & Mules Price reductionmen's/women's Josef Seibel Sue 23 Heels Stylish and fun , man/woman Nike Tanjun Sneakers & Athletic Nike Reliable reputation , men/women Cole Haan Blakeli Skimmer Loafers Crazy priceKiton Sneakers - Men Kiton Sneakers online on YOOX United Kingdom - 11532688DCHogan Sneakers - Men Hogan Sneakers online on YOOX United Kingdom - 11349556XWMen/Women bernie mev. Joel Heels The color is very eye-catching , Couture Court - Women Couture Courts online on YOOX United Kingdom - 11138202XW , Spaziomoda Sandals - Women Spaziomoda Sandals online on YOOX United Kingdom - 11572947TAGioseppo Sandals - Women Gioseppo Sandals online on YOOX United Kingdom - 11575941NP , Laura Bellariva Sneakers - Women Laura Bellariva Sneakers online on YOOX United Kingdom - 11546221CUNine West Black Kitten Heel Sandals , women Jimmy Choo Red Platforms UniqueRoper Dev Two-step into a look you'll love with the Roper Dev boots!Magnanni Gerardo Put your best foot forward in the modern design of the Magnanni Gerardo oxford , Women's Valentino Black Rockstud Sandal Pumps Good worldwide reputationWOMENS Balenciaga White Race Runners Sneakers Bestsellers worldwide , Ladies Stuart Weitzman Beige Jeweled Sandals High quality , Giuseppe Zanotti Black Yellow and White 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.