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.BLOGGER Bf-5615-1 THIGH BOOTS FOR WOMEN , Ladies Chloé Lauren Pumps Elegant appearanceSuperga 2750-EFGLU black / WhiteAdidas Originals Adilette Pride - Sandals - Men Adidas Originals Sandals online on YOOX United Kingdom - 11542321WD , Studio By Volpato Loafers - Women Studio By Volpato Loafers online on YOOX United Kingdom - 11483440FQwoman Bar III Orange Red Wedges Modern and stylish fashionPEPE JEANS Pls30362 Lindsay 800 White HIGH-TOP TRAINERS?FOR WOMEN , womens Unisa Black Estlin Dress Sandals Nice and charmingVULCASA A426123 Negro FASHION FOOTWEAR FOR WOMEN , women Givenchy Leather Sandals Easy to handle , women J.Crew Black Tumbled Sandals Pleasant appearanceStuart Weitzman Bridal & Evening Collection ChantelleLFL by Lust For Life CorsicaAdidas Dune London OLYVEA - Ankle boots - black , mens/womens KIOMI Mules High quality and cheapAdidas AllSaints ASLA - Boots - tuscan redHUGO FUTURISM HITO - High-top trainers - black , By Malene Birger MAY - High heels Colour: blackReebok Classic EXPLORE - Trainers - black/alloy/caroteneFila Sneakers - Men Fila Sneakers online on YOOX United Kingdom - 11556612ALHigh heeled leather sandals with tie fastening , brick red, La Redoute Collections , Hogan Rebel Sneakers - Men Hogan Rebel Sneakers online on YOOX United Kingdom - 11517081NDSergio Rossi Boots - Women Sergio Rossi Boots online on YOOX United Kingdom - 11287436JJFabiana Filippi Sneakers - Women Fabiana Filippi Sneakers online on YOOX United Kingdom - 11356907HP , Good Vibes Court - Women Good Vibes Courts online on YOOX United Kingdom - 11523187RS , Fendi Brown & Tan Wood Sandals , Not so expensive Five Ten Danny Macaskill , Sam Edelman Purple Women's Sneakers Levine Embellished Sneakers , Stephane Kelian Black Braided Leather Uk 5 Sandals , WOMEN Cole Haan Air Lainey Wedges Full specification ,
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.