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.Paloma Barceló Ankle Boot - Women Paloma Barceló Ankle Boots online on YOOX United Kingdom - 11516170HIL' Autre Chose Espadrilles - Women L' Autre Chose Espadrilles online on YOOX United Kingdom - 11189575DWVicenza) Ankle Boot - Women Vicenza) Ankle Boots online on YOOX United Kingdom - 11472078TD , SJP by Sarah Jessica Parker Celine , VICTORIA 25005 BOTA OUTDOOR PARA MUJER , WOMENS Nike Huarache Sneakers Immediate deliveryFitFlop SLNG II SANDAL Black , Converse Cons Auckland Racer Ox - Sneakers - Men Converse Cons Sneakers online on YOOX United Kingdom - 44807082MNLADY FLY London Black Yala Wedges Win the praise of customerswoman BCBGeneration Lemon Glow/Mojave Bg-frankee Wedges Moderate priceSTONEFLY Stella 3 LOW-TOP TRAINERS FOR WOMEN , Givenchy White Studded Tyson Shark 42 Sneakersmens/womens Roxy Viva Stamp Sandals Bright colors , Men/Women Clarks Aria Pump Flats Customer firstman/woman Frye Allen Venetian Loafers Breathable shoes , Adidas Toral High heels - camelman/woman Bella-Vita Eli Boots Clearance sale , men/women Havaianas Freedom SL Maxi Flip-Flops Sandals Many styles , men/women Brighton Idol Clogs & Mules Clearance price , Unisa WANGE - High heeled sandals Colour: blackHogan Loafers - Women Hogan Loafers online on YOOX United Kingdom - 11568169FOBoxfresh Sneakers - Men Boxfresh Sneakers online on YOOX United Kingdom - 11333786JO , Patent ballet pumps with strap, sizes 38-45 (5-10) , black, Castaluna , Oroscuro Sandals - Women Oroscuro Sandals online on YOOX United Kingdom - 11376156UP , Rodo Court - Women Rodo Courts online on YOOX United Kingdom - 11348153NM , Charlotte Olympia Court - Women Charlotte Olympia Courts online on YOOX United Kingdom - 11552842LE , John Richmond Sneakers - Men John Richmond Sneakers online on YOOX United Kingdom - 11060770UMLeather Crown Sneakers - Men Leather Crown Sneakers online on YOOX United Kingdom - 11564796SI , Nike Blueish Green Flynit Lunar 3 Sneakerswomens Christian Louboutin Brown Espadrille Wedges Germany ,
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.