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.Philipp Plein Sandals - Women Philipp Plein Sandals online on YOOX United Kingdom - 11454595RP , lady bebe Sandal Wedges Aesthetic appearancemens/womens Ivanka Trump Lara Heels Speed refund , Vibi Venezia X Yoox Loafers - Women Vibi Venezia X Yoox Loafers online on YOOX United Kingdom - 11379786FX , adidas White with Black Stripes Women’s Superstar Bold Leather Sneakers , KICKERS 350015-50 Spartame 93 Marron SANDALIA PLANA DE MUJER , LADY Jeffrey Campbell Red Sassy Platforms Various current designs , lady Dior Navy Blue Suede Wedges special purchaseladies Saint Laurent Gold Trybal Wedges quality QueenLadies American Eagle Outfitters Brown Wedges Price reductionWOMENS Kenneth Cole Reaction Rl06489le Sandals Unique , ecco ENNIO - Trainers Colour: coffeemen's/women's Paul Green Leanna Flat Flats product quality , men's/women's Lacoste Avenir Slip 118 1 Sneakers & Athletic Lacoste Promotion , Adidas Selected Femme SLFELENA NEW CHELSEA - Ankle boots - decadent chocolate , Kallistè Loafers - Women Kallistè Loafers online on YOOX United Kingdom - 11370943TSEtro Court - Women Etro Courts online on YOOX United Kingdom - 11395732XSBensimon Sneakers - Women Bensimon Sneakers online on YOOX United Kingdom - 11334123GL , Carmens Sandals - Women Carmens Sandals online on YOOX United Kingdom - 11173491EBGioseppo Sneakers - Women Gioseppo Sneakers online on YOOX United Kingdom - 11461231TB , Iron Fist Sandals - Women Iron Fist Sandals online on YOOX United Kingdom - 11537077TUNr Rapisardi Loafers - Women Nr Rapisardi Loafers online on YOOX United Kingdom - 11504834QU , Paloma Barceló Sandals - Women Paloma Barceló Sandals online on YOOX United Kingdom - 11383924PM , Salvatore Ferragamo Black Remind 0206707 SandalsBaffin Ease The Baffin Ease boot will easily become your 3-season favorite!EVOLV Slack Kick back all summer long with the handsome and comfortable style of the EVOLV Slack flip-flop. , Alexander McQueen Soft White "Larry" Studded Leather High Top Women's Sneakers SneakersRed No 16 Front Zip High Top Fashion Sneakers 849 Burgundy Sneakers , Prada White Gingham Flower Applique Heels 36.5 Sandals , LADY Dior Black Sandals Has a long 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.