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.Manas Lea Foscati Court - Women Manas Lea Foscati Courts online on YOOX United Kingdom - 11543166FO , L' Autre Chose Sandals - Women L' Autre Chose Sandals online on YOOX United Kingdom - 11577465SBStella Mccartney Open-Toe Mules - Women Stella Mccartney Open-Toe Mules online on YOOX United Kingdom - 11506559HHRELAXSHOE 289-017 FASHION FOOTWEAR FOR WOMEN , CALLAGHAN 95319 SANDALIA PLANA DE MUJERSee By Chloé Ankle Boot - Women See By Chloé Ankle Boots online on YOOX United Kingdom - 11462436SDGeorge J. Love Ankle Boot - Women George J. Love Ankle Boots online on YOOX United Kingdom - 11427026WRLadies adidas White Adilette Sandals Ideal gift for all occasions , Joshua Sanders ZENITH BOMBER - Trainersmens/womens Franco Sarto Fausta Heels uniqueAdidas Vans CLASSIC SLIP-ON PLATFORM - Slip-ons - whitemen/women Walking Cradles Torin Wide Calf Boots Famous store , Vans OLD SKOOL - Skate shoes - blackCassis c?te d'azur CYLIA - Over-the-knee boots Colour: noirMenbur KEID - High heeled sandals Colour: midgnight blue , Jack & Jones Trainers - navy blazerUnisa IDELLA - Classic ankle boots Colour: black , Gola Sneakers - Men Gola Sneakers online on YOOX United Kingdom - 11467119EE , men/women Ivanka Trump Warda 2 Clogs & Mules Elegant appearance , Prada Sport Sneakers - Men Prada Sport Sneakers online on YOOX United Kingdom - 11492667GIKandee Court - Women Kandee Courts online on YOOX United Kingdom - 11405770GNJucca Sandals - Women Jucca Sandals online on YOOX United Kingdom - 11412587RC , Hogan Sneakers - Women Hogan Sneakers online on YOOX United Kingdom - 11435855VPPiampiani Ankle Boot - Women Piampiani Ankle Boots online on YOOX United Kingdom - 11491178SX , Leather Crown Sneakers - Women Leather Crown Sneakers online on YOOX United Kingdom - 11197542DP , Divine Follie Sandals - Women Divine Follie Sandals online on YOOX United Kingdom - 11332264UM , LADY BCBGeneration Pink Formal Shoes Germanywomen Valentino Black 20464 Sandals luxuryNot so expensive Deer Stags ArgosWin highly appreciated Mark Nason Westside ,
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.