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.Guglielmo Rotta Ballet Flats - Women Guglielmo Rotta Ballet Flats online on YOOX United Kingdom - 11531726VB , SOTOALTO Conforbio WEDGE-HEEL SANDALS FOR WOMEN , Nike Red and Black Lunarlon Sneakers , men's/women's Miz Mooz Yves Boots Speed refund , Brian Cress By Campanile Ankle Boot - Women Brian Cress By Campanile Ankle Boots online on YOOX United Kingdom - 11527017GPNike Air Max 1 Ultra Moire - Sneakers - Men Nike Sneakers online on YOOX United Kingdom - 44841428NL , Diane von Furstenberg Black Sarita Chain-mesh Crisscross Sequined Slide Sandalswomen Cole Haan Nude Unknown Wedges Rich on-time deliveryMARIA JAEN 6101 FASHION LOAFERS FOR WOMENmens/womens Frye Melissa Knotted Short Boots Affordableman/woman Clarks Blanche Cacee Flats Durable serviceNative Trainers - Shell White , Reebok Classic CLUB - Trainersmen/women ECCO Sport Terra 2S Sandal Sandals General productLotto SOLISTA 200 FG - Moulded stud football boots - white/bluemen's/women's Circa Elston Sneakers & Athletic Circa renewed on time , Uri Minkoff Sneakers - Men Uri Minkoff Sneakers online on YOOX United Kingdom - 11491961JIArfango Loafers - Women Arfango Loafers online on YOOX United Kingdom - 11105327ISCasadei Court - Women Casadei Courts online on YOOX United Kingdom - 11494367VW , Chiara Ferragni Sneakers - Women Chiara Ferragni Sneakers online on YOOX United Kingdom - 11415265JKNira Rubens Sneakers - Women Nira Rubens Sneakers online on YOOX United Kingdom - 11534021XPWalter Violet Court - Women Walter Violet Courts online on YOOX United Kingdom - 11499728NM , Exquisite workmanship Mizuno Wave Rider 22discount price Reef Cushion J-Bay , Nike White Floral Print Satin and Leather Sneakers Tennis 38.5 Sneakers , MISS Prada Black Milano Formal Shoes At a lower price , lady Nike Black/Creme/White Airmax One Sneakers Different styles and styles , WOMEN Burberry Black Heel Platforms Quality and quantity guaranteed , LADY Valentino Black Rockstud Jelly Sandals Fine workmanshipTory Burch Navy Blue and Black Sandals ,
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.