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.Silvian Heach Sneakers - Women Silvian Heach Sneakers online on YOOX United Kingdom - 11519102DB , Pawelk's Ankle Boot - Women Pawelk's Ankle Boots online on YOOX United Kingdom - 11454961USNike Chino/Chino-classic Stone-light British Tan Sf Af1 “special Field Desert Camo” SneakersMISS Sole Society Leopard Juli Wedges Online shopLIBERTO BUENOS Lib33sl FLAT ESPADRILLES FOR WOMENART III 293 FASHION SANDALS FOR WOMENLadies Privileged Black Wedge Platform Sandals Unique , WEEKEND MaxMara GEL - Classic ankle boots , Men/Women Clarks Kensett Diana Boots Various styles , Bugatti MATTIA - Classic ankle bootsAdidas ONLY SHOES High heeled ankle boots - black , men's/women's Summit by White Mountain Johnna Boots Reliable performance , Men/Women Kenneth Cole New York Katrina Heels Fine artMen/Women MSGM High-top trainers Colour: tartin Beautiful , men's/women's Taryn Rose Camille Boots the most economicalByblos Sneakers - Men Byblos Sneakers online on YOOX United Kingdom - 11485073JD , D.A.T.E. Sneakers - Men D.A.T.E. Sneakers online on YOOX United Kingdom - 11576718ICY-3 Sneakers - Men Y-3 Sneakers online on YOOX United Kingdom - 11500899EI , men's/women's Nike Cheer Scorpion Sneakers & Athletic Nike Great choice , Rick Owens Sneakers - Men Rick Owens Sneakers online on YOOX United Kingdom - 11517939CU , Adidas Originals Sneakers - Men Adidas Originals Sneakers online on YOOX United Kingdom - 11237380VF , Maison Margiela Sneakers - Men Maison Margiela Sneakers online on YOOX United Kingdom - 11536947IW , E.G.J. Sandals - Women E.G.J. Sandals online on YOOX United Kingdom - 44949187TE , Saint Laurent Court - Women Saint Laurent Courts online on YOOX United Kingdom - 11509185MPMISS Prada Zebra Platforms Lush designnxJZImtB Vans Old Skool Core Classicsvarious kinds Old Gringo Laurel ShortYear-end sale Mezlan Tyson IIALDO Brilisen Super rich materials modernizes this classic ALDO Brilisen sneaker, giving it endless versatility and styleValentino Purple Rockstud Kitten Black Patent Stud Tstrap Heel 40 Pumps ,
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.