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.Álvaro González Flip Flops - Women Álvaro González Flip Flops online on YOOX United Kingdom - 11235152DIJanet & Janet Court - Women Janet & Janet Courts online on YOOX United Kingdom - 11049680ARDolce & Gabbana Sneakers - Men Dolce & Gabbana Sneakers online on YOOX United Kingdom - 11442396VXBibi Lou Sneakers - Women Bibi Lou Sneakers online on YOOX United Kingdom - 11107288LO , 1725.A Ankle Boot - Women 1725.A Ankle Boots online on YOOX United Kingdom - 11450783KXEs'givien Ankle Boot - Women Es'givien Ankle Boots online on YOOX United Kingdom - 11492945CRHjVyR0Qj men/women Roper Bailey Loafers real , women Forever 21 Black/Multi Comic Wedges retail price , lady Hermès Black Thong Sandals Fast deliveryMen/Women Pajar CANADA Adelaide Boots Global sales , men/women Mark Nason Hardee Oxfords Authentic guaranteeQuiksilver MOLOHIGHLINSLAB - Pool shoes Colour: black/grey/blue , Matisse Matisse x Amuse Society - Capri , Espadrij l′originale CLASSIC - EspadrillesGentle Souls by Kenneth Cole BirdieChampion LOW CUT SHOE ALPHA - Neutral running shoes , Reebok | Reebok Workout Plus Sneakers In Cream CN4966 , men's/women's Steve Madden Helix Loafers Stylish and funVans Sneakers - Men Vans Sneakers online on YOOX United Kingdom - 11483528CM , Geox Boots - Men Geox Boots online on YOOX United Kingdom - 11540355RJ , men's/women's ASICS Tiger Gel-Lyte III Sneakers & Athletic ASICS Tiger Comfortable touchAnya Hindmarch Sneakers - Women Anya Hindmarch Sneakers online on YOOX United Kingdom - 11463550NS , Kanna Flip Flops - Women Kanna Flip Flops online on YOOX United Kingdom - 11570698KR , q3kqXnZS ECCO Sport Aspina Mid GTX3rPg20bG SOTOALTO Salamanca SHOES FOR WOMENLadies Chloé Gold Vintage Sandals Win the praise of customersLADY Tory Burch Brown 32088645 Sandals For your choiceWOMENS Steve Madden Cream Xaria Wedges Reliable qualityTamara Mellon Black Frontline 75 Patent Sandalswomens Saint Laurent Tribute Platforms Reliable reputation ,
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.