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.Sergio Rossi Ankle Boot - Women Sergio Rossi Ankle Boots online on YOOX United Kingdom - 11087921GH , Liu ?Jo Shoes Court - Women Liu ?Jo Shoes Courts online on YOOX United Kingdom - 11368943JOGreenhouse Polo Club Sneakers - Women Greenhouse Polo Club Sneakers online on YOOX United Kingdom - 11471105HDWOMENS Alexander McQueen Pumps Online salesDanskin White & Gray Becca Style Sneaker / Sneakers , WOMENS J.Crew Blue Cypus Jeweled Sandals Reasonable priceMISS Giuseppe Zanotti Tortoiseshell Sandals High-quality materialsmens/womens Nine West Knowone Boots Aesthetic appearanceman/woman Matt Bernson Andes Boots Complete specification , men's/women's Dolce Vita Delana Heels Speed ??refundRapisardi PEPITA - Over-the-knee boots Colour: blackmen/women Globe Dover Boots good qualityAdidas Billi Bi Platform boots - olive gold , Pepe Jeans MADDOX STRAPS - Cowboy/Biker boots Colour: black , men/women Camper TWS - K400201 Boots Breathable shoes , Fila Sneakers - Men Fila Sneakers online on YOOX United Kingdom - 11481041GM , adidas Originals PROPHERE - Trainers - basic green/night carbon/solar red , Dolfie Sneakers - Women Dolfie Sneakers online on YOOX United Kingdom - 11527966UF , Hogan Loafers - Women Hogan Loafers online on YOOX United Kingdom - 11310282FX , Kharisma Ankle Boot - Women Kharisma Ankle Boots online on YOOX United Kingdom - 11455255NR , Vic Matiē Sandals - Women Vic Matiē Sandals online on YOOX United Kingdom - 11525226QBGeox Ankle Boot - Women Geox Ankle Boots online on YOOX United Kingdom - 11541903KU , AoFrZAAH ECCO Golf Biom Golf Hybrid , 64T8eNt9 The North Face Tsumoru Bootn1D8qKOW WOMEN Nike Rn Sneakers EasyLadies Loeffler Randall Taupe Wedges Known for its excellent quality , woman Giuseppe Zanotti Color Block Sandals Cheaper than the priceSaint Laurent Blue New Babies Suede Buckle SandalsRalph Lauren White with Gold Accents Valeda Sandals , MBT White Blue Moja Leather Sneaker Sneakers ,
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.