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.Diadora Heritage Equipe W S. Sw Hh - Sneakers - Women Diadora Heritage Sneakers online on YOOX United Kingdom - 11101106MP , Propet Stability Walker Medicare/HCPCS Code = A5500 Diabetic Shoe , Tory Burch Multi Color Logo Flip Flops SandalsWOMENS Coclico Taupe Sandals Diverse new design , UMA PARKER CATENA - Slip-ons Colour: asport neromens/womens Taos Footwear Anna Heels Great choice , Skechers Sport OG 85 - TrainersVersace VITELLO ABRASIVATO - Trainers Colour: neroHummel SLIMMER STADIL - High-top trainersBOBS from SKECHERS High Notes - Rocketflip*flop LOAFER MOUSE - Slippersman/woman See by Chloe SB29211 Boots Clearance price , men's/women's Clergerie Doaf01 Suede Loafer Loafers Elegant shape , men/women SoftWalk Hickory Sneakers & Athletic SoftWalk The latest technology , Men/Women Klogs Footwear Landing Clogs & Mules Popular tide shoes , Gedebe Sandals - Women Gedebe Sandals online on YOOX United Kingdom - 11517695PAMelissa Boots - Women Melissa Boots online on YOOX United Kingdom - 11291134UO , Espadrilles Espadrilles - Women Espadrilles Espadrilles online on YOOX United Kingdom - 11378918TS , Novelty Sneakers - Women Novelty Sneakers online on YOOX United Kingdom - 11463936LFKanna Sandals - Women Kanna Sandals online on YOOX United Kingdom - 11570803GTStuart Weitzman Sandals - Women Stuart Weitzman Sandals online on YOOX United Kingdom - 11584224DL , Philippe Model Sneakers - Women Philippe Model Sneakers online on YOOX United Kingdom - 11211929QX , Guess Ankle Boot - Women Guess Ankle Boots online on YOOX United Kingdom - 11467643GG , F.Lli Bruglia Loafers - Women F.Lli Bruglia Loafers online on YOOX United Kingdom - 11408785SVSergio Rossi Sandals - Women Sergio Rossi Sandals online on YOOX United Kingdom - 11412382VXN° 21 Sandals - Women N° 21 Sandals online on YOOX United Kingdom - 11445473ML , St0d9cj7 Sperry Overlook Textile Smoking Slipper , Complete specification Massimo Matteo Regina , ladies Stuart Weitzman Linen Bodajean Wedges Let our goods go out into the world , womens Prada Argento Calzature Uoma Sneakers The color is very noticeable ,
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.