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.Maison Scotch Open-Toe Mules - Women Maison Scotch Open-Toe Mules online on YOOX United Kingdom - 11557503NIDolce & Gabbana Court - Women Dolce & Gabbana Courts online on YOOX United Kingdom - 11214410EHLeonardo Principi Ankle Boot - Women Leonardo Principi Ankle Boots online on YOOX United Kingdom - 11339445SD , Wize & Ope Sneakers - Men Wize & Ope Sneakers online on YOOX United Kingdom - 11313905LA4CmXDmRV men's/women's Schutz Belua Boots featureMon Massagué Ballet Flats - Women Mon Massagué Ballet Flats online on YOOX United Kingdom - 11525868VVMISS White Floral Wedges Elegant and stable packagingmen's/women's Vince Drystan Oxfords the most economicalRosalie sandals , beige, Hush Puppies , Heo/pony leather trainers , white, Cosmoparis , Salomon XA PRO 3D CS WPNunn Bush Nichols Wingtip Chukka BootO.X.S. Loafers - Men O.X.S. Loafers online on YOOX United Kingdom - 11468270FRman/woman Frye Cece Artisan Short Boots Adequate supply and timely delivery , men/women inov-8 Roclite? 286 GTX? Sneakers & Athletic inov-8 Non-slipRaparo Boots - Women Raparo Boots online on YOOX United Kingdom - 11042223MTPinko Court - Women Pinko Courts online on YOOX United Kingdom - 11381264TTDeimille Court - Women Deimille Courts online on YOOX United Kingdom - 11562153VVGiuseppe Zanotti Sneakers - Women Giuseppe Zanotti Sneakers online on YOOX United Kingdom - 11375918EP , L'arianna Ankle Boot - Women L'arianna Ankle Boots online on YOOX United Kingdom - 11541022MKAquazzura Ankle Boot - Women Aquazzura Ankle Boots online on YOOX United Kingdom - 11528547EKChiara Ferragni Loafers - Women Chiara Ferragni Loafers online on YOOX United Kingdom - 11236631BB8JDnYtlf Lowa Approach Pro GTX LoCkPDUBeX Nike Vapor Varsity 3 TDShopping promotion Danner Trakwelt 8" NMT , Beautiful appearance Pikolinos Modena W0R-6721C2 , The color is very eye-catching Stacy Adams Sussex , MISS Hermès Black and Gray Sandals First group of customersChristian Louboutin Black Kaleidra 25mm Gold Heels A372 Sandals , women Stuart Weitzman Gold/Glitter Nudists Sandals Long-term 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.