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.Colors Of California Sandals - Women Colors Of California Sandals online on YOOX United Kingdom - 11486747LIEmanuela Caruso Capri Loafers - Women Emanuela Caruso Capri Loafers online on YOOX United Kingdom - 11557679JPProenza Schouler Open-Toe Mules - Women Proenza Schouler Open-Toe Mules online on YOOX United Kingdom - 11238985SF , ALCE 9122 ZAPATO PLANO PARA MUJERIslo Isabella Lorusso Ballet Flats - Women Islo Isabella Lorusso Ballet Flats online on YOOX United Kingdom - 11485861OIClear with Flower Detailing Across Footbed Boutique Purchase SandalsSalvatore Ferragamo Tan Leather Embellished Slide Heels SandalsNike Black Air Max Thea Txt Sneakers , women adidas Energy Boost Sneakers Immediate delivery , mens/womens Dansko Jenna Loafers The latest technology , men's/women's Geox WNEWVEGABABX6 Boots Reliable qualitymens/womens Nina Madge Heels special function , Men/Women Charlotte Olympia Pavletta Heels fashion , Men/Women Blowfish Hydro Heels a wide variety of goodsSf drift cat 7 trainers , black, Puma , mtng JAKE - Trainers - pila black , Casadei Court - Women Casadei Courts online on YOOX United Kingdom - 11503584COJ.J. Loafers - Men J.J. Loafers online on YOOX United Kingdom - 11557610XXmens/womens Crocs Freesail Realtree Xtra Clogs & Mules Very good classification , Gold Brothers Boots - Men Gold Brothers Boots online on YOOX United Kingdom - 11499008KOFrankie Morello Boots - Men Frankie Morello Boots online on YOOX United Kingdom - 11463500XON° 21 Sneakers - Men N° 21 Sneakers online on YOOX United Kingdom - 11514501GRBallin Court - Women Ballin Courts online on YOOX United Kingdom - 11518697OA , Marsèll Ankle Boot - Women Marsèll Ankle Boots online on YOOX United Kingdom - 11253681VK , Alexandre Birman Sandals - Women Alexandre Birman Sandals online on YOOX United Kingdom - 11517208SQMarco Barbabella Court - Women Marco Barbabella Courts online on YOOX United Kingdom - 11342214FGEuZVncJ9 VICTORIA S014001142mtx ZAPATILLA CON PLATAFORMA , Rich design Steve Madden Wagu Bootieauction Reef Star Cushion SassySAS Nora Embrace a look that is cute and casual with the SAS Nora slip-on
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.