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.My Ferragamo Ballet Flats - Women My Ferragamo Ballet Flats online on YOOX United Kingdom - 11429307GO , Saucony Jazz O W - Sneakers - Women Saucony Sneakers online on YOOX United Kingdom - 11114681HI , Logan Crossing Sneakers - Women Logan Crossing Sneakers online on YOOX United Kingdom - 11258541LV , Hypnosi Ankle Boot - Women Hypnosi Ankle Boots online on YOOX United Kingdom - 11222380TN , Rag & Bone Open-Toe Mules - Women Rag & Bone Open-Toe Mules online on YOOX United Kingdom - 11572494KUWOMEN Merona Brown Elliana Sandals Special function , Marsell Zucca Zeppa Round Toe Oxfordman/woman Soft Style Hula Flats Environmentally friendlyMen/Women JBU Sideline Encore Flats Complete specification , mens/womens Nine West Jakona Heels selling price , men/women Nine West Diablo Boots cheap pricePeter Kaiser ELEKTRA - Classic heelsRacine Carrée Chunky Heel Ankle BootieNike Sneakers - Men Nike Sneakers online on YOOX United Kingdom - 11245646NWVans Sneakers - Men Vans Sneakers online on YOOX United Kingdom - 11494578BSReplay Sneakers - Men Replay Sneakers online on YOOX United Kingdom - 11493079WMFabiano Ricci Sneakers - Men Fabiano Ricci Sneakers online on YOOX United Kingdom - 11508883UTmen's/women's Ben Sherman Pete Hi Sneakers & Athletic Ben Sherman Extreme speed logistics , Dkny Sneakers - Women Dkny Sneakers online on YOOX United Kingdom - 11474811WG , Cafènoir Boots - Women Cafènoir Boots online on YOOX United Kingdom - 11564088AN , Tom Ford Boots - Women Tom Ford Boots online on YOOX United Kingdom - 11239978POTory Burch Sandals - Women Tory Burch Sandals online on YOOX United Kingdom - 11530592RQGiuseppe Zanotti Sneakers - Women Giuseppe Zanotti Sneakers online on YOOX United Kingdom - 11056926XE , women Vince Camuto Cream Wedges luxury , Haflinger Magic The Magic is part of the Haflinger Grizzly Collection.Twelfth St. by Cynthia Vincent Brandy Brown Leif SandalsWOMEN Prada Black Strappy Wedges Attractive and durableWOMEN Tory Burch Tiffy 11148419 Wedges Perfect workmanship , Via Spiga Black Like New Gladiator Sandals , Dior Multicolor Slip On Sneakers 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.