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.Silvian Heach Ankle Boot - Women Silvian Heach Ankle Boots online on YOOX United Kingdom - 11469141QJSilvano Sassetti Ankle Boot - Women Silvano Sassetti Ankle Boots online on YOOX United Kingdom - 11252104JEAlberto Guardiani Sneakers - Women Alberto Guardiani Sneakers online on YOOX United Kingdom - 11478172EB , woman DKNY Black Wedges For sale , pof9WbFV man/woman Aerosoles Elimental Flats Brand , Suede 90681 Sneakers | Peacoat-Whisper Wht-Wht | PUMA SHOP ALL | PUMA United StatesConverse Chuck Taylor All Star Lift Clean Ox Core Canvas White , Weejuns® By G.H. Bass & Co Open-Toe Mules - Women Weejuns® By G.H. Bass & Co Open-Toe Mules online on YOOX United Kingdom - 11481067XKVersace New Women Palazzo High Top Bronze Snakeskin Sneakers 10 SneakersWomen's Shellys London Black Platform Sandals special discount priceSALORD JOVER 7460 R FASHION FOOTWEAR FOR WOMEN , Ladies Cole Haan D41840 Wedges Lush design , mens/womens PATRIZIA Caspian Sandals Excellent workmanship , Adidas Chie Mihara OCAL - Ankle boots - black , men/women G.H. Bass & Co. Walter Loafers Selected materialsAdidas Skechers SYNERGY 2.0 - Trainers - charcoalStellaberg Court - Women Stellaberg Courts online on YOOX United Kingdom - 11258755CFman/woman Charles by Charles David Rome Heels Strong heat and heat resistanceman/woman Saucony Carrera XC Flat Sneakers & Athletic Saucony wholesale , Green George Boots - Men Green George Boots online on YOOX United Kingdom - 11491692PWClarks Originals Boots - Men Clarks Originals Boots online on YOOX United Kingdom - 11003042UDStele Loafers - Women Stele Loafers online on YOOX United Kingdom - 11454277NU , Rkkr Sneakers - Women Rkkr Sneakers online on YOOX United Kingdom - 11476455WLAtos Lombardini Court - Women Atos Lombardini Courts online on YOOX United Kingdom - 11533572HV , Adidas Originals Sneakers - Women Adidas Originals Sneakers online on YOOX United Kingdom - 11563585UF , Isabel Marant Cream Bekett Sneaker Sneakersexcellent quality Dr. Scholl's Work Inhale , retail price Kenneth Cole Reaction Wind-Y , Cheap Five Ten Anasazi Moccasym , Naot Susan Enjoy some YOU time in the reliable Susan sandal from Naot
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.