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.Sergio Rossi Court - Women Sergio Rossi Courts online on YOOX United Kingdom - 11284765HGIsabel Marant Multicolor Sneakers Wedge Sneakerslady Saint Laurent Red Platforms superior , Dr. Martens Work Corvid SD Non-Metallic Composite Toe 7-Eye Boot , Converse Chuck Taylor® All Star® Ox - SeasonalPONS QUINTANA 4284 ZAPATO DE CU?A PARA MUJER , lady Tory Burch Rich Brown Wedges Rich design , women Jessica Simpson Gold Myelle Sandals Primary qualityWOMENS Prada Pink Formal Shoes Good design , BEBO MOEISHA - High heeled ankle boots , Kennel + Schmenger CAT - Trainers , mens/womens VIONIC Minna Flats New productmen's/women's Alegria Jade Sandals Year-end sale , Fiore di Lucia Milano MARA - Platform sandals Colour: nero , Aigle MISS JULIETTE BOTTILON PRINT - Wellies Colour: dark blue , Hagl?fs RIDGE GT MEN - Walking shoes Colour: true black , man/woman Lacoste Millard Chukka 316 1 Boots classic stylemens/womens Anne Klein Unitee Flats Easy to useAdidas Clarks TRI - Trainers - blackSantoni Sneakers - Women Santoni Sneakers online on YOOX United Kingdom - 11539743HUmen's/women's Hi-Tec Celcius WP Sneakers & Athletic Hi-Tec Easy to useSalomon LAB SENSE 7 - Trail running shoes Colour: racing redSchutz Sandals - Women Schutz Sandals online on YOOX United Kingdom - 11447767GGArfango Loafers - Women Arfango Loafers online on YOOX United Kingdom - 11476391EK , Pantanetti Ankle Boot - Women Pantanetti Ankle Boots online on YOOX United Kingdom - 11560018SE , dXuQjDLL LADY Pink/ Black Platforms Repair , Liu •Jo Shoes Ankle Boot - Women Liu •Jo Shoes Ankle Boots online on YOOX United Kingdom - 11501227MOladies Prada Black Floral Applique Platforms Clever and practicalladies Prada Pewter Studded Sandals Clever and practical , Keen Brown Santa Fe At Esd 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.