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.Twin-Set Simona Barbieri Sandals - Women Twin-Set Simona Barbieri Sandals online on YOOX United Kingdom - 11143388VJ , Ruco Line Ankle Boot - Women Ruco Line Ankle Boots online on YOOX United Kingdom - 11559542XRNike Sf Af1 Mid - Sneakers - Men Nike Sneakers online on YOOX United Kingdom - 11438389GN , I Blues Sneakers - Women I Blues Sneakers online on YOOX United Kingdom - 11367280PXRSJjeORQ Brogues , black patent, Tamaris , o9qMplrC mens/womens Tahari Monte Heels buy , man/woman Matt Bernson Lido Boots Great choiceSKECHERS Performance Go Walk 4 - Containmens/womens Romika Banja 16 Boots High-quality , men/women Jessica Simpson Stefina Heels elegantMen/Women SoftWalk Jermaine Heels Pick up at the boutique , Mellow Yellow EPIJAQUARD - Platform boots Colour: blackYab Sneakers - Men Yab Sneakers online on YOOX United Kingdom - 11278622WIWoolrich Sneakers - Men Woolrich Sneakers online on YOOX United Kingdom - 11491929EEMen/Women Osiris Peril Sneakers & Athletic Osiris High quality and low overhead , Adidas Liu Jo Jeans KIM - High-top trainers - black , Antonio Marras Sneakers - Men Antonio Marras Sneakers online on YOOX United Kingdom - 11467446FSCastañer Espadrilles - Women Castañer Espadrilles online on YOOX United Kingdom - 11554926KE , Piampiani Sandals - Women Piampiani Sandals online on YOOX United Kingdom - 11571279QLChloé Boots - Women Chloé Boots online on YOOX United Kingdom - 11462054VP , Luca Valentini Court - Women Luca Valentini Courts online on YOOX United Kingdom - 11520009MQ , Ixos Ankle Boot - Women Ixos Ankle Boots online on YOOX United Kingdom - 11385157IF , Direct business Jewel Badgley Mischka TellaCrazy price Minnetonka Gwen BootieSelected materials Dolce Vita ShayFirst quality Allen Edmonds Wilbert , Stuart Weitzman Black Dark Brown Simple Comfortable In Patent & Cork Material Sandals , lady MRKT Gold Metallic Platform Sandals a wide range of products , lady Manolo Blahnik Pink Strappy Sandals At a lower price , Barbara Bui Red Hightop Wedge Sneakers Sneakers ,
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.