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.Mcq Alexander Mcqueen Court - Women Mcq Alexander Mcqueen Courts online on YOOX United Kingdom - 11473486PC , Chie Mihara Ankle Boot - Women Chie Mihara Ankle Boots online on YOOX United Kingdom - 11305697JV , Flavio Creation Ankle Boot - Women Flavio Creation Ankle Boots online on YOOX United Kingdom - 11544756PG , Melissa VW ULTRA GIRL 16 CHERUB White / Red , MARTINELLI 4432n-martinelli FASHION ANKLE BOOTS FOR WOMENMISS Chloé Nude/Tan Espadrilles Wedges Excellent featuresConverse Chuck Taylor? All Star? Tricolor Mesh Himens/womens Stuart Weitzman Singlesky Heels Optimal pricemens/womens French Connection Deon Heels Perfect processingmens/womens Rieker 60839 Regina 39 Sandals economicSalamander ANDREW - Smart slip-ons - black , Liu Jo Jeans MAXY - Trainers Colour: pinkMulo Sneakers - Men Mulo Sneakers online on YOOX United Kingdom - 11518714RS , Lanvin Sneakers - Men Lanvin Sneakers online on YOOX United Kingdom - 11514098MU , man/woman Lakai MJ Weather Treated Sneakers & Athletic Lakai wholesaleDiadora Heritage Sneakers - Men Diadora Heritage Sneakers online on YOOX United Kingdom - 44994403NB , Fiorina Sandals - Women Fiorina Sandals online on YOOX United Kingdom - 11314832RHFabi Court - Women Fabi Courts online on YOOX United Kingdom - 11536052KPHangar Sandals - Women Hangar Sandals online on YOOX United Kingdom - 11467574TS , Rockport Sneakers - Women Rockport Sneakers online on YOOX United Kingdom - 11509267BR , Cafènoir Sneakers - Women Cafènoir Sneakers online on YOOX United Kingdom - 11478410CO , Puma Sneakers - Women Puma Sneakers online on YOOX United Kingdom - 11495702EUEtro Sandals - Women Etro Sandals online on YOOX United Kingdom - 11286854LRDkny Sandals - Women Dkny Sandals online on YOOX United Kingdom - 11459179SDCafènoir Ankle Boot - Women Cafènoir Ankle Boots online on YOOX United Kingdom - 11477895WQKeys Ankle Boot - Women Keys Ankle Boots online on YOOX United Kingdom - 11551397CFPons Quintana Loafers - Women Pons Quintana Loafers online on YOOX United Kingdom - 11518083CE , ZnS0NxEK woman Alex Marie Sandals ElegantPick up at the boutique Franco Sarto Genesse , professional design Tommy Bahama Allegro ,
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.