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.Essentiel Antwerp Ankle Boot - Women Essentiel Antwerp Ankle Boots online on YOOX United Kingdom - 11485452JR , Windsor Smith Sandals - Women Windsor Smith Sandals online on YOOX United Kingdom - 11152186CO , ONE 18.3 FG Men's Soccer Cleats | Black-Silver-RedSperry Top-Sider A/O 2-EYE Brown / DarkShy By Arvid Yuki Boots - Women Shy By Arvid Yuki Boots online on YOOX United Kingdom - 11526922ODNike Blazer Low Sd - Sneakers - Women Nike Sneakers online on YOOX United Kingdom - 11551942APOTAZUA 1751 ZAPATO DE SALóN PARA MUJERMen/Women bernie mev. Eternal Sandals high qualitySol Sana ASHLEY HEEL - Sandals , Supra VAIDER CW - High-top trainers - amber gold , Men/Women ALDO Orietta Sandals Every item described is available , Adidas Unisa DUPON_SE - Mules - pyriteSantoni Boots - Men Santoni Boots online on YOOX United Kingdom - 11479410UHAdidas Jeffrey Campbell LUMINOUS - Classic ankle boots - black/blueMarc May Boots - Men Marc May Boots online on YOOX United Kingdom - 11555874SV , Kmb Court - Women Kmb Courts online on YOOX United Kingdom - 11323513QC , Espadrilles Sandals - Women Espadrilles Sandals online on YOOX United Kingdom - 11356567SBStudio Pollini Court - Women Studio Pollini Courts online on YOOX United Kingdom - 11534869KW , Ash Ankle Boot - Women Ash Ankle Boots online on YOOX United Kingdom - 11468379LJ , Replay Ankle Boot - Women Replay Ankle Boots online on YOOX United Kingdom - 11494916EIDonna Più Court - Women Donna Più Courts online on YOOX United Kingdom - 11527029FH , Pierre Darré Sneakers - Women Pierre Darré Sneakers online on YOOX United Kingdom - 11435074FHCommon Projects Sneakers - Men Common Projects Sneakers online on YOOX United Kingdom - 11342079GUTory Burch White and Gold Sandals , 7kWsXusn New Balance QuickFit Mid-High Arch , 6NKaPqf3 M&F Western Fleece Slip-On Slippers , Ladies Tory Burch Gunmetal Miller Sandals Highly praised and appreciated by the audience of consumers , Giuseppe Zanotti Blue New Eagle Canvas Slip On Platform Sandalsladies Brian Atwood Nudist Formal Shoes Beautiful designwomens Alexander McQueen Silver Sneakers Sneakers Long-term reputation ,
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.