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.Emporio Armani Flip Flops - Women Emporio Armani Flip Flops online on YOOX United Kingdom - 11333874QO , The Seller Sandals - Women The Seller Sandals online on YOOX United Kingdom - 11417023JM , Maria Cristina Boots - Women Maria Cristina Boots online on YOOX United Kingdom - 11514233CFNike Purple Barefoot Ride 4.0 SneakersDORKING Botn Dorking De Piel Negro D7187-stca FASHION FOOTWEAR FOR WOMENMTNG 53947 C5893 Microf Negro FASHION BOOTS FOR WOMEN , Ladies Geox Black Respira Sneaker Sneakers High quality , Women's Vince Camuto Black Sandals Diverse new design , Converse CHUCK 70 - Trainers Colour: mercury grey/black/egret , men/women Jonak Classic heels cheap , mens/womens El Naturalista Tulip NF30 Sandals usemen's/women's Goodyear Footwear Teton Boots Recommended today , Calvin Klein Jeans MEL - Trainers , Tommy Hilfiger LEON - Trainers - diamond greyIshikawa Sneakers - Men Ishikawa Sneakers online on YOOX United Kingdom - 11302433QU , K-SWISS HERREN BIGSHOT LIGHT 3 CARPET - Indoor tennis shoes Colour: white/navyadidas Performance PRO ELEVATE 2018 - Basketball shoes Colour: scarlet/footwear white/core black , men's/women's Nike Air Zoom Resistance Sneakers & Athletic Nike Fashion patternPhilippe Model Sneakers - Men Philippe Model Sneakers online on YOOX United Kingdom - 11460971VW , Allison Sandals - Women Allison Sandals online on YOOX United Kingdom - 11458000AG , Carrano Ankle Boot - Women Carrano Ankle Boots online on YOOX United Kingdom - 11484033LW , Voile Blanche Sneakers - Women Voile Blanche Sneakers online on YOOX United Kingdom - 11580956QJAdieu Ankle Boot - Women Adieu Ankle Boots online on YOOX United Kingdom - 11216705WN , Marni Ankle Boot - Women Marni Ankle Boots online on YOOX United Kingdom - 11503380QMPollini Ankle Boot - Women Pollini Ankle Boots online on YOOX United Kingdom - 11446933IU , Fendi Metallic Gold/Chocolare Brown Logo Sandals , Tory Burch Gold Scallop Wedges Sandals , Propet Otto Enjoy leisurely travel in the Propet Otto slip-onMISS Tory Burch Brown Sandals. Platforms product quality , Calvin Klein Brown Imilia Women’s Sneakers Sneakers ,
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.