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.Marc Ellis Ankle Boot - Women Marc Ellis Ankle Boots online on YOOX United Kingdom - 11288449NL , Sam Edelman Flip Flops - Women Sam Edelman Flip Flops online on YOOX United Kingdom - 11089905FK , Parlanti Ankle Boot - Women Parlanti Ankle Boots online on YOOX United Kingdom - 11504220EODiamond Supply Co. Boo J XL , Nunn Bush Marcell Bicycle Toe OxfordPIKOLINOS W3s-4552 ZAPATO PLANO PARA MUJERALPE 3316-alpe THIGH BOOTS FOR WOMENwoman Dolce&Gabbana White Leather Sandals bestsell , Atp Atelier Ankle Boot - Women Atp Atelier Ankle Boots online on YOOX United Kingdom - 11496276CE , women Arizona Jean Company 3229 Wedges New design , KAPPA 3032zw0 Calexi 902 Blue LOW-TOP TRAINERS , ladies BCBGMAXAZRIA Silver Gold Formal Shoes uppers , ladies Chaco Nutmeg Z/1 Unaweep Sandals Free , mens/womens Not Rated Lacy Sandals good qualitymens/womens Sergio Rossi A78360-MCAZ01 Heels useMen/Women VIONIC Britney Sandals Excellent qualityAdidas Gabor Slip-ons - metalMinelli Classic ankle boots Colour: sapinmen/women Dockers Park Moc Toe Slip-On Loafers Complete specification , Levi's? LOCH - Trainers - dark khaki , Santoni Loafers - Men Santoni Loafers online on YOOX United Kingdom - 11283738SSMizuno WAVE STREAM - Neutral running shoes - black/ombre blue/whiteman/woman Kenneth Cole Reaction Slam Shot Sandals Elegant and solemnPrimadonna Boots - Women Primadonna Boots online on YOOX United Kingdom - 11496163CH , 1,618 Ankle Boot - Women 1,618 Ankle Boots online on YOOX United Kingdom - 11499056QH , Cafènoir Flip Flops - Women Cafènoir Flip Flops online on YOOX United Kingdom - 11406751UF , Keys Ankle Boot - Women Keys Ankle Boots online on YOOX United Kingdom - 11551396DW , F.Lli Bruglia Loafers - Women F.Lli Bruglia Loafers online on YOOX United Kingdom - 11408785SV , Carefully selected materials Brooks Ghost 10 GTX®WOMEN Prada Blue Montana Esapdrille Sandals Known for its beautiful quality ,
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.