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.Hundred 100 Ankle Boot - Women Hundred 100 Ankle Boots online on YOOX United Kingdom - 11516526TT , Stuart Weitzman Ankle Boot - Women Stuart Weitzman Ankle Boots online on YOOX United Kingdom - 11211419GPVic Matiē Ankle Boot - Women Vic Matiē Ankle Boots online on YOOX United Kingdom - 11275887KK , Nike Black White Free Connect Sneakers , LADY Adrienne Vittadini Tan Wedges durablegrDhR64H Leather trainers , brown, Nike , Dibrera By Paolo Zanoli Boots - Women Dibrera By Paolo Zanoli Boots online on YOOX United Kingdom - 11446773TB , Ladies Mixit Black Formal Shoes Popular tide shoes , Women's Tory Burch Miller 2 Sandals Different styles , Tommy Hilfiger LIGHTWEIGHT MENS RUNNER - TrainersClassic leather mu trainers , white, Reebok , Coolway NOAH - Pool sliders , men/women Superga 4832 FGLU Sneakers & Athletic Superga Cost-effectivemens/womens Touch Ups Sage by Dyeables Heels Lush design , men/women Kenneth Cole New York Geneva Heels Modern modemen/women ASH Eloise Clogs & Mules Price reduction , Adidas LK Bennett FERN - High heels - light biscuit , mens/womens Gabor Classic heels Colour: schwarz Rich on-time deliveryPhilippe Model Sneakers - Men Philippe Model Sneakers online on YOOX United Kingdom - 11159794TV , Bruno Magli Loafers - Men Bruno Magli Loafers online on YOOX United Kingdom - 11499928CBEtro Sandals - Women Etro Sandals online on YOOX United Kingdom - 11286838QRLagoa Espadrilles - Women Lagoa Espadrilles online on YOOX United Kingdom - 11182132CIO.X.S. Ankle Boot - Women O.X.S. Ankle Boots online on YOOX United Kingdom - 11501445XG , Valleverde Ankle Boot - Women Valleverde Ankle Boots online on YOOX United Kingdom - 11465065MHKat Maconie Court - Women Kat Maconie Courts online on YOOX United Kingdom - 11336175ASAlexander Wang Sandals - Women Alexander Wang Sandals online on YOOX United Kingdom - 11557321VHPhilippe Model Sneakers - Women Philippe Model Sneakers online on YOOX United Kingdom - 11343760RO , At a lower price Spring Step Vanish , lady Jimmy Choo Portia 120 Wedges Known for its beautiful qualityladies OKA b. Silver Wedges Exquisite workmanship ,
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.