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.Rêve D'un Jour Sandals - Women Rêve D'un Jour Sandals online on YOOX United Kingdom - 11343295STTosca Blu Shoes Loafers - Women Tosca Blu Shoes Loafers online on YOOX United Kingdom - 11468216ROMen/Women adidas Predator Tango 18.3 Turf Sneakers & Athletic adidas Known for its excellent quality , Alberta Ferretti Loafers - Women Alberta Ferretti Loafers online on YOOX United Kingdom - 11473524BD , WOMENS Christian Louboutin Tan Sandals ModernMARIA MARE 66174 FASHION SANDALS FOR WOMENMen/Women ara Barb Loafers Fashion versatile shoes , mens/womens Aravon Katy Sandals Excellent functionman/woman Calvin Klein Brodie Oxfords businessFaith CHLOE - High heels , Vans SK8-HI REISSUE - High-top trainers - brown/true whiteOffice | Office Fahrenheit boots in black suedeMerrell BARE ACCESS FLEX - Neutral running shoes - tropical punchman/woman Crocs Classic Lined Graphic Clog Clogs & Mules Brand feastmens/womens Allen Edmonds Whitney Cap Toe Oxfords Popular tide shoesmens/womens Creative Recreation Manzo Sneakers & Athletic Creative Recreation Don't worry when shoppingmen/women adidas Crazy Explosive 2017 Sneakers & Athletic adidas King of the crowdDeimille Sandals - Women Deimille Sandals online on YOOX United Kingdom - 11488104GHPantanetti Ankle Boot - Women Pantanetti Ankle Boots online on YOOX United Kingdom - 11467928LTAnother Project Sandals - Women Another Project Sandals online on YOOX United Kingdom - 11565417HSPaloma Barceló Boots - Women Paloma Barceló Boots online on YOOX United Kingdom - 11516215CW , Vicini Tapeet Sandals - Women Vicini Tapeet Sandals online on YOOX United Kingdom - 11396722NN , Chloé Ankle Boot - Women Chloé Ankle Boots online on YOOX United Kingdom - 11497274LV , DmBzQvYk REFRESH 63871 C Camel , High quality and economy adidas Golf Climacool Knitstable quality Ariat Sport Stratten , Christian Louboutin Yellow Frangine Fringe Moon Suede Flat Hightop Sneaker 36 Sneakers , womens Dansko Brown Mary Janes Wedges Fast delivery , Sam Edelman Navy Blue Marlow Sneaker Sneakers , WOMENS Matiko Blue Lisbeth Wedges Price reduction
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.