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.Andrea Pinto Ankle Boot - Women Andrea Pinto Ankle Boots online on YOOX United Kingdom - 11506399EI , Converse All Star Sneakers - Women Converse All Star Sneakers online on YOOX United Kingdom - 11581095PP , Men/Women CARLOS by Carlos Santana Gilmore Sandals Highly appreciated and widely trusted in and outSusana Traca Sandals - Women Susana Traca Sandals online on YOOX United Kingdom - 11229389OQ , MARTINELLI 0849pyp-martinelli ANKLE BOOTS FOR MENwomens J.Crew Navy Blue Espadrilles Wedges Popular recommendationMISS Golden Goose Deluxe Brand Sneakers uppers , man/woman Vaneli Ganet Flats Seasonal hot saleNew Look LOAF - Slip-ons , Shoe The Bear AYA STUDS - Ankle boots Colour: black , man/woman Yellow Box Adra Sandals Beautiful and charmingmens/womens Calvin Klein Germina Wedge Heels buy onlineMoschino Sneakers - Women Moschino Sneakers online on YOOX United Kingdom - 11326565ICPollini Loafers - Men Pollini Loafers online on YOOX United Kingdom - 11569875RPDoucal's Loafers - Men Doucal's Loafers online on YOOX United Kingdom - 11407238AKHogan Sneakers - Men Hogan Sneakers online on YOOX United Kingdom - 11310878DF , men's/women's Tommy Bahama Mandalay Boots We have won praise from our customers.Scarpa ATOM SL GTX - Trail running shoes Colour: turkisch sea/orange fluo , men's/women's Anne Klein Channyng Heels Every item described is availablemen/women ASICS Gun Lap SC Sneakers & Athletic ASICS realCappelletti Sneakers - Women Cappelletti Sneakers online on YOOX United Kingdom - 11387748SI , Stellaberg Boots - Women Stellaberg Boots online on YOOX United Kingdom - 11233605DUStokton Sneakers - Women Stokton Sneakers online on YOOX United Kingdom - 11269419BB , John Galliano Loafers - Women John Galliano Loafers online on YOOX United Kingdom - 11361973CA , Lotto Leggenda Sneakers - Men Lotto Leggenda Sneakers online on YOOX United Kingdom - 11339785WN , Reliable performance Old Gringo Acoma Tallsuperior Columbia Heavenly Shorty Omni-Heat , Lightweight shoes Lacoste Straightset 118 1online sale Pikolinos Gandia 849-5847C1 , Ladies Jimmy Choo Gold India Sandals special purchase
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.