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.Sara López Ankle Boot - Women Sara López Ankle Boots online on YOOX United Kingdom - 11475410HIBrunello Cucinelli Ankle Boot - Women Brunello Cucinelli Ankle Boots online on YOOX United Kingdom - 11549377TA , Saint Laurent Ankle Boot - Women Saint Laurent Ankle Boots online on YOOX United Kingdom - 11516133SGadidas Performance NEMEZIZ TANGO 18.4 TF - Astro turf trainers - core black/core black/footwear white , PITILLOS 2612 BOTíN PLANO DE MUJERWOMENS Multi Beaded Wedges shopping onlineNike Women's Huarache Run Ultra Premium Sneakers Is A Must Have For Easygoing Comfort. The Sneaker Features A Sleek One SneakersAsh DAZED White / Pinkwomens Impo Black Awesome Formal Shoes Very good colorPuma Black White Stylish Women's Sneakers Sneakersmen/women Kamik Boston 2 Boots New productman/woman Loeffler Randall Lucia Sandals Good qualitymen's/women's Swedish Hasbeens Helena Heels High securitySams?e & Sams?e KYLE - Slip-ons , men's/women's Nina Roxie Boots retail price , Vagabond JESSIE - Ankle bootsRight Bank Shoe Co? Jade HeelRiver Island | River Island brogue sneakers in whitePS by Paul Smith LAPIN - Trainers Colour: white , man/woman Steve Madden Naomi Bootie Boots Fashion patternDr Martens | Dr Martens 1461 classic black patent flat shoes , New Look JESH - Ankle strap ballet pumps Colour: light pink , mens/womens adidas Powerlift 3 Sneakers & Athletic adidas Shopping promotion , Bruno Bordese Loafers - Men Bruno Bordese Loafers online on YOOX United Kingdom - 11522853IML'amour Boots - Women L'amour Boots online on YOOX United Kingdom - 11493373SJStella Mccartney Sneakers - Women Stella Mccartney Sneakers online on YOOX United Kingdom - 11563091DAO.X.S. Ankle Boot - Women O.X.S. Ankle Boots online on YOOX United Kingdom - 11471817GV , Pavq8kbq Blue by Betsey Johnson Taryn , WOMEN Balenciaga Blue 412345.wax30.4203.na Sneakers Won highly esteemed and widely trusted at home and abroadTory Burch Tan and Orange Le Smoking Patent Flat 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.