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.Charme Ankle Boot - Women Charme Ankle Boots online on YOOX United Kingdom - 11454870HGWOMENS Banana Republic Black Platforms Good qualityAdidas Originals Crazy 8 Adv (Asw) - Sneakers - Men Adidas Originals Sneakers online on YOOX United Kingdom - 11446343AO , Christian Louboutin Silver Gwinee 70 Glitter Mini/Specchio Toe Sandals , MISS Bone Abound Simone Espadrille Wedges The newest style , WOMENS Christian Louboutin Fuchsia Slingback Platforms retail price , DESCANFLEX 16355 ZAPATO DE CU?A PARA MUJERMen/Women Adrianna Papell Gracie Heels Lightweight shoes , man/woman Rebecca Minkoff Calista Slide Sandals valueEllis mae leather sandals , black, ClarksMadden Girl PERLA - High heelsAdidas ANGULUS Mules - yellowadidas Originals POD-S3.1 - Trainers - core black/footwear white , Leather biker ankle boots , black, La Redoute CollectionsMen/Women Lilly Pulitzer Alyssa Wedge Heels Preferential priceAdidas Clae BRADLEY - Trainers - black , BEBO VANESSA - High heeled ankle boots , Prada Sandals - Women Prada Sandals online on YOOX United Kingdom - 11399847TBFiorentini+Baker Ankle Boot - Women Fiorentini+Baker Ankle Boots online on YOOX United Kingdom - 11499551QI , Ruco Line Sneakers - Women Ruco Line Sneakers online on YOOX United Kingdom - 11346156HNSpaziomoda Ankle Boot - Women Spaziomoda Ankle Boots online on YOOX United Kingdom - 11569699MFBruno Verri Loafers - Men Bruno Verri Loafers online on YOOX United Kingdom - 11555196VJPalm Angels Sneakers - Men Palm Angels Sneakers online on YOOX United Kingdom - 11248687NG , Vlk4RpU7 La Sportiva Nepal EVO GTX , NfNemLm7 Carhartt 6-Inch Work-Flex™ Work BootInternational choice Klogs Footwear SilvertonSettlement Price Base London WestburyStella McCartney Black Blue Adidas Ultra 'boost' Black/Indigo Houndstooth Sneaker SneakersLadies Cream Denmark Color Leather Sandals Fair price , Women's Prada Blue Leather Slide Sandals New market ,
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.