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.Tom Ford Ankle Boot - Women Tom Ford Ankle Boots online on YOOX United Kingdom - 11477234NVNunn Bush Littleton Plain Toe ChukkaBUZZ 15520 FASHION LOAFERS FOR WOMENRALPH LAUREN Latasha SHOES FOR WOMENThe highest quality material Trainers , blue/pink, Nike , LOedlLUO man/woman Vaneli Milbie Heels wonderful , FitFlop SUPERBENDY BALLERINAS Deep / Plum , Moa Master Of Arts Sneakers - Men Moa Master Of Arts Sneakers online on YOOX United Kingdom - 11194985QC , Rust Mood Flip Flops - Women Rust Mood Flip Flops online on YOOX United Kingdom - 11382787SKWomen's Tory Burch Neutral Wedges Let our products go out into the world , LADY Saint Laurent White Sneakers Used in durabilityWOMENS Diesel Mazarine Blue Casino Sandals Year-end salesLadies J.Crew Black Leather Fringe Sandals Preferred material , Kappa MESETA - Sports shoes Colour: grey/whiteAdidas No Name ARCADE STRAPS - Trainers - navy/bluemens/womens Bernardo Miami Fringe Sandals At an affordable price , mens/womens Naturalizer Dessie Heels Guarantee quality and quantity , Adidas SPM IRIN - Sandals - red , Tod's Sneakers - Women Tod's Sneakers online on YOOX United Kingdom - 11569666LTNike Lunartempo - Sneakers - Men Nike Sneakers online on YOOX United Kingdom - 44854474WF , Kanna Sandals - Women Kanna Sandals online on YOOX United Kingdom - 11570498UU , Magrit Court - Women Magrit Courts online on YOOX United Kingdom - 11571496MCBoemos Ankle Boot - Women Boemos Ankle Boots online on YOOX United Kingdom - 11549746TB , Valentino Garavani Sandals - Women Valentino Garavani Sandals online on YOOX United Kingdom - 11447965XGadidas Green Ultra Boost Sneaker Sneakers , 33KF1wUn Nike Free TR 8 Neo , yFfvPVcs Spenco Comfort Insole 2 Pack , Shopping promotion Mark Nason BrentwoodGolden Goose Deluxe Brand Superstar Hand Painted SneakersWOMENS Callisto Cognac Callye Sandals Different products
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.