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.Le Ble Ankle Boot - Women Le Ble Ankle Boots online on YOOX United Kingdom - 11527977LQDonna Soft Loafers - Women Donna Soft Loafers online on YOOX United Kingdom - 11486927QH , Rodolphe Menudier Court - Women Rodolphe Menudier Courts online on YOOX United Kingdom - 11091090DL , Rockport Essential Details Waterproof Apron Toe , Nike Air Max 1 Se - Sneakers - Women Nike Sneakers online on YOOX United Kingdom - 11203043DD , Vans Ua Authentic (Pig Suede) - Sneakers - Women Vans Sneakers online on YOOX United Kingdom - 11559627CV , Salvatore Ferragamo Black New Groove Jet Crystal Pool Slide Sandalsladies Christian Louboutin Black 140mm Platforms Various current designswomens Valentino Rock Stud Pumps At an affordable priceIBIZA BEACH 4838 Rojo SANDALIA BIO PARA MUJER , WOMEN Tory Burch Black Meredith Wedges to buy , WOMEN Maiyet Black May20808 Sandals Good marketmen/women Keen Winterport II Boots Primary quality , lilimill OXA - Cowboy/Biker boots Colour: nero , men/women Havaianas Slim Candy Flip Flops Sandals Preferred boutiqueFred Perry | Fred Perry Kingston White Leather Sneakersmen's/women's Rieker 79061 Sylvia 61 Boots Skilled manufacturing , W.Gibbs Boots - Men W.Gibbs Boots online on YOOX United Kingdom - 11559548XDAdidas adidas Performance TERREX TRACEROCKER GTX - Hiking shoes - tecink/legink/reamag , Santoni Sneakers - Women Santoni Sneakers online on YOOX United Kingdom - 11539714ERLiu ?Jo Boots - Women Liu ?Jo Boots online on YOOX United Kingdom - 11498944WTUnisa Ankle Boot - Women Unisa Ankle Boots online on YOOX United Kingdom - 11492706GF , Curiosité Ankle Boot - Women Curiosité Ankle Boots online on YOOX United Kingdom - 11530802XD , MxfslHVB Durango Music City Boat Moc , Consumer first Reef Spiniker Mid NB , Crazy price, Birmingham On Cloudventure Midtop , Prada White/Blue Men's Color Block Leather High Top Sneakers Sneakersladies Black Mansfield Oxfords Formal Shoes Quality and quantity guaranteed , Isabel Marant Black Boston Stainer Basket Sneaker Sneakers , ladies Keds Navy/Pink Waterproof Sneaker Sneakers quality products ,
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.