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.Anna F. Ankle Boot - Women Anna F. Ankle Boots online on YOOX United Kingdom - 11454511JOIslo Isabella Lorusso Court - Women Islo Isabella Lorusso Courts online on YOOX United Kingdom - 11548144QMAnaid Kupuri Ankle Boot - Women Anaid Kupuri Ankle Boots online on YOOX United Kingdom - 11550051RU , Prada Sport Sneakers - Women Prada Sport Sneakers online on YOOX United Kingdom - 11495035SV , Diamond Supply Co. Boo J Aloha , COOLWAY Tequila SANDALIA PLANA DE MUJERLadies Balenciaga Black Crocs Platforms economical , DPb7Ss0C Smash trainers , white, Puma , LEVIS Vtru0019s Trucker Low 0040 Navy LOW-TOP TRAINERS FOR WOMEN , Women's Converse Chuck Taylor Sneakers Modern and elegant fashion , Lauren Ralph Lauren Black and White 234567 Sandals , CLARKS Tri Carmen SANDALIA PLANA DE MUJERJohnston & Murphy Hair Calf Marlena Sandalsmen's/women's RAYE Aubrey Heels Acknowledgement feedbackMen/Women LifeStride Xandy WC Boots useman/woman Vince Baldriz Heels Brand feast , Men/Women Earth Zest Sneakers & Athletic Earth buy onlineBrimarts Loafers - Men Brimarts Loafers online on YOOX United Kingdom - 11557457OF , Hogan Boots - Men Hogan Boots online on YOOX United Kingdom - 11335349DWAlexander Mcqueen Court - Women Alexander Mcqueen Courts online on YOOX United Kingdom - 11284243PC , Gina Ballet Flats - Women Gina Ballet Flats online on YOOX United Kingdom - 11556313GIMarco Barbabella Court - Women Marco Barbabella Courts online on YOOX United Kingdom - 11455964EI , Guess Ankle Boot - Women Guess Ankle Boots online on YOOX United Kingdom - 11466787ASChloé Ankle Boot - Women Chloé Ankle Boots online on YOOX United Kingdom - 11464649NVSalvatore Ferragamo Red Gancio Leather Sandals , tiYKF42W Deer Stags Herman Tassel Loafer , eXFcSALw woman Renvy Blue Wedges GermanyValentino Grey Rockstud City Pastel T Strap Block Heel Sandal 37.5 Pumps , LADY Zara Black Platforms a wide range of products , lady adidas Black/Orange Bb2647 Sneakers special offer ,
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.