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.Giambattista Valli Ankle Boot - Women Giambattista Valli Ankle Boots online on YOOX United Kingdom - 11529795UNDolce & Gabbana Espadrilles - Men Dolce & Gabbana Espadrilles online on YOOX United Kingdom - 11147601UE , Women's Chloé Black Platforms Selected materialsmen/women Sam Edelman Lelani Sneakers & Athletic Sam Edelman Speed refundLiviana Conti Flip Flops - Women Liviana Conti Flip Flops online on YOOX United Kingdom - 11422641TL , MTNG 93868 C19912 Spring Kaky BOTíN PLANO DE MUJER , woman Zara Mauve Leather (1531) Sandals Excellent craft , STONEFLY Eclipse 9 LOW-TOP TRAINERS FOR WOMEN , mens/womens Clarks Sashlin Fiona Heels Skilled manufacturing , men/women Nine West Mubina Boots Personalization trendmen's/women's Sam Edelman Farrell Loafers Optimal pricemen/women Aerosoles Be Cool Heels fine , Even&Odd Ankle cuff sandals Colour: black , man/woman Vidorreta Espadrilles Colour: black Wear resistant , Sturlini Boots - Men Sturlini Boots online on YOOX United Kingdom - 11546007IFLoriblu Boots - Men Loriblu Boots online on YOOX United Kingdom - 11510552UEAdidas Vans CLASSIC SLIP-ON PLATFORM - Slip-ons - medieval blue/true whiteMen/Women Steve Madden Vantage Sneakers & Athletic Steve Madden Outstanding styleProfession: Bottier Sneakers - Men Profession: Bottier Sneakers online on YOOX United Kingdom - 11053094JV , Romagnoli Sneakers - Women Romagnoli Sneakers online on YOOX United Kingdom - 11514178IR , Rodo Court - Women Rodo Courts online on YOOX United Kingdom - 11498993ST , Casadei Court - Women Casadei Courts online on YOOX United Kingdom - 11309088KICult Ankle Boot - Women Cult Ankle Boots online on YOOX United Kingdom - 11477098RS , Emanuela Passeri Loafers - Women Emanuela Passeri Loafers online on YOOX United Kingdom - 11444658CN9Y1QLNk9 L'Artiste by Spring Step Nataliaretail price Salomon Outline Mid GTXVarious latest designs Stuart Weitzman Naomi , ladies Cole Haan Blue Mediterran Sandals Buy online , WOMEN Giuseppe Zanotti Maroon Liza Platforms CheapLADY Sergio Rossi Nude/Gold Sandals Cheap ideal ,
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.