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.Coliac Martina Grasselli Loafers - Women Coliac Martina Grasselli Loafers online on YOOX United Kingdom - 11505249QE , Madden Girl Ankle Boot - Women Madden Girl Ankle Boots online on YOOX United Kingdom - 11564955CPNike Performance VAPORX 12 ACADEMY CR7 IC - Indoor football boots - flash crimson/chrome/dark grey/blackGaia D'este Loafers - Women Gaia D'este Loafers online on YOOX United Kingdom - 11010829AEMagli By Bruno Magli Ankle Boot - Women Magli By Bruno Magli Ankle Boots online on YOOX United Kingdom - 11490978FLTory Burch Red Geometric Thandie Wedge Flip Flop SandalsFRATELLI MILLORETI A295beg ZAPATO PLANO PARA MUJERman/woman Dr. Scholl's Modest Heels Preferred material , Public Desire FREYA - Sandals Colour: blackmen/women Massimo Matteo Rachel Sandals cheaperSlydes SHUGA - Mules Colour: pink/multicolor , men/women Comfortiva Tatianna - Soft Spots Heels Optimal pricemen/women Hunter Original Mirror Studded Sandal Sandals Valuable boutique , men/women Charles by Charles David Dean Flats Price reductionmens/womens etnies Scout Sneakers & Athletic etnies Online ShoppingOnitsuka Tiger MEXICO 66 - Trainers - white/blue , mens/womens Summit by White Mountain Talisha Flats wonderful , mens/womens Taos Footwear Standout Boots Win highly appreciatedJoshua*S Loafers - Women Joshua*S Loafers online on YOOX United Kingdom - 11372608CL , Lanvin Sneakers - Men Lanvin Sneakers online on YOOX United Kingdom - 11327396MImens/womens Soft Style Dee Heels Elegant and sturdy set mealVans Sneakers - Women Vans Sneakers online on YOOX United Kingdom - 11492341GE , Buttero® Boots - Women Buttero® Boots online on YOOX United Kingdom - 11556162EA , Frau Court - Women Frau Courts online on YOOX United Kingdom - 11480585IM , Buttero® Ankle Boot - Women Buttero® Ankle Boots online on YOOX United Kingdom - 11468709PNCuplé Ankle Boot - Women Cuplé Ankle Boots online on YOOX United Kingdom - 11542557MW , Human border Merrell Icepack Polar Waterproof , Global sales Taryn Rose Charlee , Beautiful and charming Eileen Fisher WinnNike Blue Black Pink White Air 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.