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.The Last Conspiracy Sneakers - Men The Last Conspiracy Sneakers online on YOOX United Kingdom - 11519379GALogan Crossing Sneakers - Women Logan Crossing Sneakers online on YOOX United Kingdom - 11258548DN , Andrea Catini Court - Women Andrea Catini Courts online on YOOX United Kingdom - 11444955SVECCO 12213301375 LOW-TOP TRAINERS FOR WOMEN , FitFlop SPORTYPOP X SNEAKER MarineShy By Arvid Yuki Sneakers - Women Shy By Arvid Yuki Sneakers online on YOOX United Kingdom - 11050075QW , Paul Green Tan Genuine Leather Strappy Bow-tie Sandals , LADY Stuart Weitzman Brown Black Wedges New styleWomen's Jeffrey Campbell Nude Mariel Wedges tendermen's/women's Jessica Simpson Cassel Heels Crazy priceman/woman Eileen Fisher Kyra Heels Louis, elaborateLeather chelsea boots , black, Dr MartensReebok Classic Trainers - marble/whiteNine West Carerra Tall Dress Bootmen/women Vince Blakely Boots Guarantee quality and quantityVans Sneakers - Men Vans Sneakers online on YOOX United Kingdom - 11574591DAman/woman Reebok Run Supreme 3.0 MT Sneakers & Athletic Reebok Cheap order , man/woman Etro Ankle Wrap Espadrille Flats As of the latest model , mens/womens KIOMI Slip-ons - cognac Shoes Attractive and durable , Giuseppe Zanotti Loafers - Women Giuseppe Zanotti Loafers online on YOOX United Kingdom - 11446038NPMartin Rey Sandals - Women Martin Rey Sandals online on YOOX United Kingdom - 11525813MBLuca Valentini Sandals - Women Luca Valentini Sandals online on YOOX United Kingdom - 11417056MTStuart Weitzman Court - Women Stuart Weitzman Courts online on YOOX United Kingdom - 11518931MLrSEZ23sQ Lacoste Gazon BL 1 CamfHeWkwKD SKECHERS 12119-bbk TRAINERS FOR WOMENVaneli Rhyme Create endless looks with this Vaneli Rhyme bootie. , Jimmy Choo Pink Patent Leather Bergen Peep Toe Wedges SandalsLadies Christian Louboutin Disconoeud 140 Platforms Various current designsWOMENS BCBGMAXAZRIA Gold Leather Formal Shoes Beautiful art , women Brighton Brown Brighton-brown-pepper-leather-slides-sandals-size-8-5-m Sandals Fast delivery ,
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.