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.Paola Ferri Ankle Boot - Women Paola Ferri Ankle Boots online on YOOX United Kingdom - 11228573MJ , Cross Walk Ankle Boot - Women Cross Walk Ankle Boots online on YOOX United Kingdom - 11518215LC , Rose's Roses Sandals - Women Rose's Roses Sandals online on YOOX United Kingdom - 11496702MTPIKOLINOS W2e-9582 FASHION BOOTS FOR WOMEN , FLEXX Slip ZAPATO CONFORT DE MUJER , Ash VICKY White / BrokenKAPPA 3032dg0 Keysy 910 Blue Marine LOW-TOP TRAINERS FOR WOMEN , CLARKS 26133983 Wynnmere Navy Nubuck WEDGE-HEEL SANDALS FOR WOMENladies Stuart Weitzman Nude Slingback Wedges On-linelady Topshop Black Wedges Economical and practical , Reebok | Reebok Rapide Og In Whitemen/women Nine West Hadriel Boots modern , Men/Women Delman Caryn Heels Wear resistantSelected Homme Trainers - whiteAdidas L’Autre Chose High heeled sandals - black/pink , DC Shoes TRIBEKA - Trainers - black gradient , men's/women's XOXO Balta Heels Cheaper than the price , Fiorangelo Loafers - Women Fiorangelo Loafers online on YOOX United Kingdom - 11448214AGMarsèll Boots - Men Marsèll Boots online on YOOX United Kingdom - 11477525VO , Moschino Boots - Men Moschino Boots online on YOOX United Kingdom - 11492801GBmen/women Ted Baker Kamilla Heels Known for its beautiful quality , Alexander Hotto Boots - Women Alexander Hotto Boots online on YOOX United Kingdom - 11474054RO , Prada Vintage Baby Cayman Heels SandalsClearance price Sol Sana Holt SlideQuality and quantity guaranteed Steve Madden Native , Propet Gary The versatility of the Gary will keep you comfortable whatever the occasion may beetnies Cirrus Approach your daily routine in stylish, laid-back comfort with the etnies Cirrus shoe!IZOD Imperial Represent the best of the Empire with the IZOD
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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.