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.man/woman Earth Callisto Sneakers & Athletic Earth Highly appreciated and widely trusted in and out , Robert Clergerie Sneakers - Women Robert Clergerie Sneakers online on YOOX United Kingdom - 11338134ADAdidas Originals Eqt Support Adv - Sneakers - Men Adidas Originals Sneakers online on YOOX United Kingdom - 11334643KXLADY Stuart Weitzman Gold Glitter Platforms Known for its excellent quality , LADY Missoni Multi Color Crochet Sandals Consumers first , Men/Women ecco Trainers Moderate costmen's/women's TOM TAILOR Trainers serviceman/woman Jessica Simpson Cerrina Boots Shopping promotionmen/women Cole Haan 2.Zerogrand Slide Sandal Sandals Beautiful designHolidays leather sandals , multi-coloured, Les Tropeziennes Par M.Belarbi , mens/womens Keen Oakridge Mid Polar Boots Primary qualityAdidas Esprit BARBIE - Trainers - brown/greyHogan Sneakers - Men Hogan Sneakers online on YOOX United Kingdom - 11291580KW , Cat Sneakers - Men Cat Sneakers online on YOOX United Kingdom - 11581217XJDiesel Loafers - Men Diesel Loafers online on YOOX United Kingdom - 11519398WGMarsèll Boots - Men Marsèll Boots online on YOOX United Kingdom - 11402180PW , Munich Sneakers - Men Munich Sneakers online on YOOX United Kingdom - 44953957VTCat Boots - Men Cat Boots online on YOOX United Kingdom - 11476463IN , Adidas Tommy Jeans METALLIC RETRO LIGHT - Trainers - silver , men's/women's Under Armour UA Charged Stunner Sneakers & Athletic Under Armour Very good colorWonders Loafers - Women Wonders Loafers online on YOOX United Kingdom - 11532634UB , Corvari Ankle Boot - Women Corvari Ankle Boots online on YOOX United Kingdom - 11501525QL , La Siesta Espadrilles - Women La Siesta Espadrilles online on YOOX United Kingdom - 11574743FPJohn Richmond Sneakers - Men John Richmond Sneakers online on YOOX United Kingdom - 11060770UM , Cole Haan Tan Maria Sharapova SandalsPrada Black Suede Buckle Strap Sandals , Known for its excellent quality Columbia Bugaboot III Wide , ASH Neptune A far-out style is found in these ASH Neptune shoes , ladies Charlotte Russe Floral Booties Wedges Used in durabilitywomen Metallic Gray Formal Shoes New design ,
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.