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 Morando Ankle Boot - Women Andrea Morando Ankle Boots online on YOOX United Kingdom - 11525118VLDolce & Gabbana Boots - Men Dolce & Gabbana Boots online on YOOX United Kingdom - 11465477DXhd7ZEnqi woman Vans plat skool diversityJc Play By Jeffrey Campbell Sneakers - Women Jc Play By Jeffrey Campbell Sneakers online on YOOX United Kingdom - 11356332OC , Steve Madden Black High Top Wedge SneakersNike Black and White Roshe Premium Sneakers , Ladies Jimmy Choo Champagne Wedges Different stylesman/woman Joie Gage Heels Clever and practicalmens/womens Rocket Dog Terry Boots Famous store , men's/women's Eric Michael Ventura Heels Many stylesSeychelles BC Footwear by Seychelles Snack Bar , men/women Nine West Abrah Heels Characteristics , ASICS DYNAFLYTE 3 - Competition running shoes - black/whiteASICS GEL-EXCITE 5 - Neutral running shoes Colour: black/flash coral , Palladium PALLAPHOENIX - Trainers - olive night , ASICS GEL-DEDICATE 5 INDOOR - Indoor tennis shoes , Vans Sneakers - Men Vans Sneakers online on YOOX United Kingdom - 11493606SE , man/woman Calvin Klein Pernina Heels Make full use of materials , Men/Women Charles by Charles David Leanna Heels Crazy price, Birminghammens/womens ECCO Devin Moc Penny Loafer Loafers Selling new products , Ann Demeulemeester Sneakers - Men Ann Demeulemeester Sneakers online on YOOX United Kingdom - 11572658NE , mens/womens Cycleur de Luxe Crush XL Sneakers & Athletic Cycleur de Luxe Moderate costPremiata Ankle Boot - Women Premiata Ankle Boots online on YOOX United Kingdom - 11529630DB , Diadora Heritage Sneakers - Women Diadora Heritage Sneakers online on YOOX United Kingdom - 11328331XN , Tory Burch Blue Miller Patent Sandals , Explosive good goods New Balance T590 v3Elegant shape Vince Camuto FinderStuart Weitzman Black Dark Brown Simple Comfortable In Patent & Cork Material Sandals , LADY Jimmy Choo Black Nayeem Sandals Preferred materialLadies Stuart Weitzman Gold Wedges High-quality materials
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.