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.Cafènoir Ballet Flats - Women Cafènoir Ballet Flats online on YOOX United Kingdom - 11373222SHSKECHERS Relaxed Fit Segment - Barillo , Nike Orange Doc Brown Vandals Sneakersmen's/women's Superga 2750 Synleadiamondmirrorw Sneaker Sneakers & Athletic Superga Speed refund , MTNG 50719 Golden C17852 Blanco FASHION SANDALS FOR WOMEN , LADY Tory Burch Black Saray Wedges Modern mode , womens Prada Deep Taupe Sandals Platforms Big saleMen/Women 1.STATE Frel Sandals In short supplyAlberto Zago High heeled sandals Colour: bluIntentionally Blank JESSICA - Mules , mens/womens Puma DAMEN - Trainers Innovative designmens/womens CL By Laundry Nicole Heels Used in durability , man/woman BOSS TIMELESS - Trainers excellent , Reebok FUSION FLEXWEAVE - Neutral running shoes - black/ash grey/coal , Les Tropéziennes par M Belarbi JAIPUR - Winter boots Colour: noirRoberto Botticelli Sneakers - Men Roberto Botticelli Sneakers online on YOOX United Kingdom - 11554618LK , Aquarelle Sandals - Women Aquarelle Sandals online on YOOX United Kingdom - 11473375PUColmar Sneakers - Women Colmar Sneakers online on YOOX United Kingdom - 11553369IQRas Sandals - Women Ras Sandals online on YOOX United Kingdom - 11562638USGiannico Sandals - Women Giannico Sandals online on YOOX United Kingdom - 11420492PW , Vince. Open-Toe Mules - Women Vince. Open-Toe Mules online on YOOX United Kingdom - 11536498DRGeneve Ankle Boot - Women Geneve Ankle Boots online on YOOX United Kingdom - 11470215ENPantofola D'oro Sneakers - Women Pantofola D'oro Sneakers online on YOOX United Kingdom - 11457179NM , 8gr36jBi SKECHERS Easy Going - Heightenur0RF69v The North Face Sestriere Low , The latest technology Taryn Rose Carson WeatherproofMephisto Adriano The Adriano walking shoe is great for everyday wear around the town or at work , WOMEN Frye Black Marlene Twisted Sandals Pleasant appearance , woman Miu Miu Navy Crystal Sandals Optimal price , Ladies Fendi Black Latoya Platforms Flagship store ,
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.