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.Colors Of California Sandals - Women Colors Of California Sandals online on YOOX United Kingdom - 11475315BD , PITILLOS 2703 ZAPATO CONFORT DE MUJERValentino Coral New In Box Rockstud Sneakers 10.5(Euro 40.5) Sneakers , Dezario Black Silver Rhinestone Strappy Clear Vinyl Worn Once SandalsDonna Carolina Cowboy/Biker boots Colour: poncho neroBelstaff ELMDALE - Classic ankle boots , mens/womens Minnetonka Blaire Heels Various goods , men's/women's Seychelles Ultimately Sandals Online Shopping , Puma LEADCAT COOGI - MulesConverse Chuck Taylor? All Star? Hi - Court Ripstopman/woman GUESS Raelyn Sandals At a lower price , Nike Performance PHANTOM OBRAX 3 CLUB DF TF - Astro turf trainersmen's/women's Sperry Flex Deck CVO Canvas Sneakers & Athletic Sperry Clearance sale , Simply Be WIDE FIT EDITA - High heeled sandals Colour: rose gold , men's/women's Nightgazer trainers , black, Nike Shoes Not so expensivemen/women Viking GYDA - Wellies Big clearance salemen's/women's Louise et Cie Betha Sneakers & Athletic Louise et Cie Best-selling worldwideDeimille Court - Women Deimille Courts online on YOOX United Kingdom - 11562077FC , Eytys Sneakers - Women Eytys Sneakers online on YOOX United Kingdom - 11250660TA , U.S.Polo Assn. Sneakers - Women U.S.Polo Assn. Sneakers online on YOOX United Kingdom - 11491880TV , Juicy Couture Sneakers - Women Juicy Couture Sneakers online on YOOX United Kingdom - 11537413LK , Mangano Ankle Boot - Women Mangano Ankle Boots online on YOOX United Kingdom - 11287882ML , Nira Rubens Sneakers - Women Nira Rubens Sneakers online on YOOX United Kingdom - 11486129FHPhilippe Model Sneakers - Women Philippe Model Sneakers online on YOOX United Kingdom - 11341198VG , Neil Barrett Sneakers - Men Neil Barrett Sneakers online on YOOX United Kingdom - 11392760XBNina Silver Bliss Callie Glitter Sandals , Moderate cost Vans Half Cab® Pro , Easy to clean surface Ariat Bit Cruiser , 5gjTKznX lady Prada Stone Sneakers Really , ladies Andre Assous Sandals Strong heat and wear resistance
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.