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.Guess By Marciano Sandals - Women Guess By Marciano Sandals online on YOOX United Kingdom - 11547127SU , Oreni 1903 Court - Women Oreni 1903 Courts online on YOOX United Kingdom - 11484172HUAriat Conquest Pull-On H2O Insulated 400GWOMEN Gianni Bini Formal Shoes impeccablelady Valentino Metallic Garavani Sandals We have received praise from our customers.Miu Miu Black Two Tone Leather Square Toe Sneakers Sneakers , YOKONO Cadiz 073 Blanco WEDGE-HEEL SANDALS FOR WOMENwomen Fendi Br Sandals Stylish and charming , Dorothy Perkins GEMMA - Classic heelsMen/Women ALDO Wigon Sandals Lush design , men's/women's Sperry A/O 2-Eye Daytona Boat Sperry Reliable performance , Tod's Loafers - Women Tod's Loafers online on YOOX United Kingdom - 11396514MFHummel TERRAFLY SPRING LOW - Sports shoes - blue wing teal , Men/Women A.S.98 Platform sandals Colour: nero Easy to useSmith's American Loafers - Men Smith's American Loafers online on YOOX United Kingdom - 11455521FN , Arfango Court - Women Arfango Courts online on YOOX United Kingdom - 11475009ALTod's Court - Women Tod's Courts online on YOOX United Kingdom - 11016948AX , Deimille Sandals - Women Deimille Sandals online on YOOX United Kingdom - 11399797US , Francesca Conoci Loafers - Women Francesca Conoci Loafers online on YOOX United Kingdom - 11398518DRGiuseppe Zanotti Boots - Women Giuseppe Zanotti Boots online on YOOX United Kingdom - 11312050CT , Giancarlo Paoli Sneakers - Women Giancarlo Paoli Sneakers online on YOOX United Kingdom - 11343749JLCharlotte Olympia Court - Women Charlotte Olympia Courts online on YOOX United Kingdom - 11571024EP , Nike Air Zoom Structure 18 Sneakers , s0Z4TtXG LOLAS S049406065bnp MULES PARA MUJER , Clearance Havaianas Slim Nautical Flip-Flops , Affordable Chooka Solid Duck SkimmerWOMENS adidas Red Mens Running Sneakers High-quality materials , WOMENS BCBGMAXAZRIA Brown Coral Sandals Easy to handle , WOMENS Black 46799 Formal Shoes Superior quality , lady Prada Milano . Platforms Elegant style
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.