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.Gianni Marra Sandals - Women Gianni Marra Sandals online on YOOX United Kingdom - 11103329WQARCHE Eonon ZAPATO CONFORT DE MUJER , Kat Maconie Agnes - Ankle Boot - Women Kat Maconie Ankle Boots online on YOOX United Kingdom - 11567019AU , N.D.C. Made By Hand Boots - Men N.D.C. Made By Hand Boots online on YOOX United Kingdom - 11514145TS , woman adidas Black Sambas Sneakers Highly appreciated and widely trusted in and outBandolino Pewter New W/O Box Sparkle Wedge SneakersSONNAX 21100 FASHION ANKLE BOOTS FOR WOMEN , Clarks Originals MARGOT MULE - Mules , mens/womens Naturalizer Janet Loafers Quality queenmen's/women's Chinese Laundry Ozzie Heels sell , man/woman Clergerie Iana Sandals Lush designAdidas Caprice Boots - blackSKECHERS Relaxed Fit?: Segment - Mixonman/woman El Naturalista Leaves N5003 Heels Attractive and durableHogan Court - Women Hogan Courts online on YOOX United Kingdom - 11212871QAGeox Boots - Men Geox Boots online on YOOX United Kingdom - 11539451OO , Rouge Court - Women Rouge Courts online on YOOX United Kingdom - 11517532AFDesigual Sandals - Women Desigual Sandals online on YOOX United Kingdom - 11440087NQGuess Sandals - Women Guess Sandals online on YOOX United Kingdom - 11484097EN , Espadrilles Espadrilles - Women Espadrilles Espadrilles online on YOOX United Kingdom - 11462148LNAlberto Fermani Sandals - Women Alberto Fermani Sandals online on YOOX United Kingdom - 11563121BS , Gianni Marra Sandals - Women Gianni Marra Sandals online on YOOX United Kingdom - 11408963HRJimmy Choo Sandals - Women Jimmy Choo Sandals online on YOOX United Kingdom - 11503037XXAiVICKwq ECCO Turn Gore-Tex Chukka Tiedurability Taos Footwear Escape 2Beautiful color Two24 by Ariat Starlight , Donald J. Pliner Black Elegant Strap Slide From Sandals , MISS Sole Society Black Wedges Quality and quantity guaranteed , Valentino Coral Snake Embossed Leather Garavani Enamel&crystal Sandals , Women's Burberry White Slingback Heels Platforms Elegant ,
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.