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.Flower Mountain® Sneakers - Women Flower Mountain® Sneakers online on YOOX United Kingdom - 11485566LU , NRGY Comet Running Shoes | Ribbon Red-Iron Gate , TSUGI NETFIT v2 Sneakers | BlueFlower-Aquifer-Whisperwt | PUMA Private Sale | PUMA United StatesWOMENS Tory Burch Brown Elizabella Platforms International choiceLevi's? Shoes Jeffrey 501 Button Your FlyAir Jordan Grey and White 3’s Sneakers , women adidas Unknown Sneakers Suitable for color , MISS ALAÏA Gunmetal High Sandals Long-term reputationman/woman ara Gibson Heels Comfortable and naturalMen/Women Reef J-Bay III Sandals high qualityKenneth Cole Reaction Sling N Arrow , Nike Performance HYPERDUNK X - Basketball shoes - schwarz/wei?Adidas Vans ULTRARANGE - Trainers - black/peat , Steve Madden FUEGO - Trainers - black , Salewa WS MTN TRAINER - Walking shoes , Reebok Sneakers - Men Reebok Sneakers online on YOOX United Kingdom - 11484755AEBarracuda Sneakers - Men Barracuda Sneakers online on YOOX United Kingdom - 11415430SI , Santoni Sneakers - Men Santoni Sneakers online on YOOX United Kingdom - 11541936EBmen's/women's SKECHERS Vapor - Bow Time Sneakers & Athletic SKECHERS special promotion , Adidas Shoe The Bear EMMY - Ankle boots - blackKurt Geiger London | Kurt Geiger Black Leather Mules With Tortoise Effect Contrast Heel , Cafènoir Sandals - Women Cafènoir Sandals online on YOOX United Kingdom - 11558818BKBruno Premi Sandals - Women Bruno Premi Sandals online on YOOX United Kingdom - 11443503BXAnnarita N. Sneakers - Women Annarita N. Sneakers online on YOOX United Kingdom - 11479628SHPantofola D'oro Sneakers - Men Pantofola D'oro Sneakers online on YOOX United Kingdom - 11575916JQ , wx6mFmRy women Merona Beige Wedges Freeonline shop Ted Baker Qarla , Cheaper than the price Dan Post BennettNike White/Black-rcr Blue-pr Platinum Air Max Full Ride Tr Sneakers , MISS Burberry Classic Plaid Espadrille Wedges Excellent craft ,
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.