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.Le Coq Sportif Sneakers - Men Le Coq Sportif Sneakers online on YOOX United Kingdom - 11534360XLjY9h5CZg men/women Clergerie Etore Heels comfortabilityKing Avanti Legends Pack Sneakers | Puma Black-Vibrant Orange , men/women DV by Dolce Vita Rumble Sneakers & Athletic DV by Dolce Vita Quality and consumer firstLADY Stuart Weitzman Brown Suede Wedges Rich on-time deliverymens/womens Sigerson Morrison Pramod Heels Year-end saleman/woman Sofft Boca Sandals cheap price , ASOS DESIGN | ASOS DESIGN Statue bow mid heelsIvy Park EMBOSSED LOGO SLIDER - Mules Colour: eggshellRockport Cobb Hill Collection Cobb Hill Willa High Topmen's/women's H?gl Boots Colour: blue Very practicalman/woman Menbur Maria Del Mar Heels Fine workmanship , Jackal Sneakers - Men Jackal Sneakers online on YOOX United Kingdom - 11504350NE , men's/women's Vidorreta Ankle boots Colour: crudo a wide variety of goods , Fred Perry | Fred Perry B721 Leather Sneakers With Rose Gold TrimNike Performance ZOOM ALL OUT LOW 2 - Neutral running shoes - obsidian/sail/black , Jack Wolfskin VOJO HIKE MID TEXAPORE MEN - Walking boots - dark wood , Fabi Loafers - Women Fabi Loafers online on YOOX United Kingdom - 11304067RDManuel Barceló Sneakers - Women Manuel Barceló Sneakers online on YOOX United Kingdom - 11511526KU , Ruco Line Sneakers - Women Ruco Line Sneakers online on YOOX United Kingdom - 11334712LM , Elena Iachi Sneakers - Women Elena Iachi Sneakers online on YOOX United Kingdom - 11570996WKsytua8jE To Boot New York Ludlum , Beautiful appearance Vans Classic Slip-On DX , Bloch Element This studio fitness sneaker, from Bloch, is sure to take you through every stepDockers Hausman Put your handsome style on display with the Dockers Hausman brogue derbylady L.A.M.B. Black Limited Edition Platforms The first set of comprehensive specifications for customers , womens Stuart Weitzman Black Strappy Platforms Excellent performance , Women's Melody Ehsani x Reebok Sneakers Excellent valueAerosoles Silver and Black Sparkle Wedge Sandals , womens Bucco Brown/Gold Carmine Wedges Reliable reputation ,
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.