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.Alexander Mcqueen Ankle Boot - Women Alexander Mcqueen Ankle Boots online on YOOX United Kingdom - 11522333GD , Saint Laurent Ankle Boot - Women Saint Laurent Ankle Boots online on YOOX United Kingdom - 44941739LT , Studio Pollini Sandals - Women Studio Pollini Sandals online on YOOX United Kingdom - 11519260WJPellettieri Di Parma Sneakers - Men Pellettieri Di Parma Sneakers online on YOOX United Kingdom - 11579737TK , woman BCBG Paris Belted Lakyle2 Wedges Elegant and robust menu , Nike Blue & Red Air Max 95 Bb2 Sneakers , womens Nicholas Kirkwood Pink Suede Platforms Exquisite workmanship , LADY AllSaints Black Wedge Sandals Easy to handleMen/Women Rose Petals Lafayette Heels New style , Pearl Izumi EM Trail M 2 v3Even&Odd Classic ankle boots Colour: blackALDO DADOSSA - High heelsMen/Women Donald J Pliner Andor Loafers leading the fashion , Aztec leather ankle boots , taupe, La Redoute Collections , men's/women's Rieker Mules Colour: schwarz retail price , Amalfi Loafers - Men Amalfi Loafers online on YOOX United Kingdom - 11534104NS , Dirk Bikkembergs Sneakers - Men Dirk Bikkembergs Sneakers online on YOOX United Kingdom - 44998974WO , Morobē Court - Women Morobē Courts online on YOOX United Kingdom - 11474374CK , Guess Sandals - Women Guess Sandals online on YOOX United Kingdom - 11122212RM , 2Star Sneakers - Women 2Star Sneakers online on YOOX United Kingdom - 11339432KU , B-Store Ankle Boot - Women B-Store Ankle Boots online on YOOX United Kingdom - 11519128GE , Marian Ankle Boot - Women Marian Ankle Boots online on YOOX United Kingdom - 11503806XK , Roger Vivier Sandals - Women Roger Vivier Sandals online on YOOX United Kingdom - 11397838AB , Bruno Bordese Sandals - Men Bruno Bordese Sandals online on YOOX United Kingdom - 11427948LHRich on-time delivery SALEWA Firetail 3Trotters Samantha Accent your brunch ensemble with the Trotters Samantha flat.Prada Black Patent Leather Criss Cross Ankle Strap Heel Platform SandalsFranco Sarto Black Open Toe Silver Trim Patent SandalsGivenchy Black Classic Logo Rubber Pool Slide 41 SandalsWOMENS Blue Satin Heels Formal Shoes High 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.