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.Penelope Chilvers Espadrilles - Women Penelope Chilvers Espadrilles online on YOOX United Kingdom - 11438670TFFormentini Ankle Boot - Women Formentini Ankle Boots online on YOOX United Kingdom - 11479352MOFLEXIMAX 114 ZAPATO CONFORT DE MUJERwoman Koolaburra Stardust Piaz Wedges Really , MARIA MARE 67174 C41071 Blanco WEDGE-HEEL ESPADRILLES FOR WOMEN , Cole Haan Beige Kitten Heel Slides Leather New SandalsIBIZA BEACH 726 ZAPATO PLANO PARA MUJERman/woman Nine West Zarong Flats Most practicalTrack leather ankle boots , burgundy, Levi's , Antillas w0h leather sandals , black, Pikolinos , Men/Women Vince Monastir Boots Latest styles , DC Shoes HEATHROW - Trainersadidas x Kolor Response Boost Sneakermen/women Melissa Shoes Ultragirl Sweet XII Flats Optimal price , Adidas Lacoste LEROND CAW - Trainers - white , Jo Ghost Classic ankle boots - diver neroASICS GEL-MISSION 3 - Walking trainers - black/carbon/phantom , Hogan Sneakers - Women Hogan Sneakers online on YOOX United Kingdom - 11496041AODiemme Sneakers - Men Diemme Sneakers online on YOOX United Kingdom - 11207291MVASOS DESIGN | ASOS DESIGN Slim Kelby flat elastic over the knee bootsZinda Court - Women Zinda Courts online on YOOX United Kingdom - 11532087LAFabi Sneakers - Women Fabi Sneakers online on YOOX United Kingdom - 11415369LMD-S!De Sneakers - Women D-S!De Sneakers online on YOOX United Kingdom - 11236478OW , Marsèll Ankle Boot - Women Marsèll Ankle Boots online on YOOX United Kingdom - 11543190CSLotto Leggenda Sneakers - Women Lotto Leggenda Sneakers online on YOOX United Kingdom - 11162946FP , Lola Cruz Court - Women Lola Cruz Courts online on YOOX United Kingdom - 11479250JI , Valentino Garavani Court - Women Valentino Garavani Courts online on YOOX United Kingdom - 11539269QO , Camper Navy Myriam Leather/ Neoprene Sandals , King of the crowd Caterpillar Casual StarstruckLADY Joie Coral Jaclyn Sandals From the latest model ,
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.