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.Cinzia Araia Ankle Boot - Women Cinzia Araia Ankle Boots online on YOOX United Kingdom - 11542882BHDonna Più Ankle Boot - Women Donna Più Ankle Boots online on YOOX United Kingdom - 11504652VVGuido Sgariglia Sandals - Women Guido Sgariglia Sandals online on YOOX United Kingdom - 11533796GW , Massimo Matteo Velvet Slip-On with Bit , COOLWAY Tahali LOW-TOP TRAINERS FOR WOMEN , 3Prr5CeN Men/Women Steven Aiken Heels auctionLM45fBcF Men/Women Bebe Parris Sandals luxuriousNike Neon and Blue Aur Max 90 Sneakers , Nike Black & Neon Blue 2011 Airmax SneakersMen/Women Pelle Moda Alicia Heels Price reductionmen's/women's Dolce Vita Emmit Boots buy onlineCalvin Klein Jeans PHILIPPA - WelliesLoeffler Randall Emi Scallop Block Heel Sandal , Kappa ORBIT - Sports shoes , men's/women's Frye Miles Vintage Stitch Pull-On Boots Good market , Reebok | Reebok Workout Plus Sneakers In Cream CN4966 , Cafènoir Sneakers - Women Cafènoir Sneakers online on YOOX United Kingdom - 11144295JMmen/women Steve Madden Jimmy Sneakers & Athletic Steve Madden Popular recommendation , mens/womens Running shoes , yellow, Bensimon Shoes Vintage tide shoes , Ganni Sneakers - Women Ganni Sneakers online on YOOX United Kingdom - 11536630XG , Gioseppo Sandals - Women Gioseppo Sandals online on YOOX United Kingdom - 11575949CJMoon Boot Boots - Women Moon Boot Boots online on YOOX United Kingdom - 11543976XWTory Burch Court - Women Tory Burch Courts online on YOOX United Kingdom - 11429573SB , Walter Violet Court - Women Walter Violet Courts online on YOOX United Kingdom - 11499755RNAlberto Moretti Sandals - Women Alberto Moretti Sandals online on YOOX United Kingdom - 11222011TIJimmy Choo Sandals - Women Jimmy Choo Sandals online on YOOX United Kingdom - 11484435SL , RiJePuzH rag & bone Beha Mule , mrpIJl7z L'Artiste by Spring Step Laniraz , High quality and economy Volcom New School 2Dr. Martens Black Suede Wooly Bully Sneakers ,
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.