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.Twin-Set Simona Barbieri Boots - Women Twin-Set Simona Barbieri Boots online on YOOX United Kingdom - 11484735FPYosi Samra Ballet Flats - Women Yosi Samra Ballet Flats online on YOOX United Kingdom - 11526379WT , 48 HOURS 1204 SHOES FOR WOMEN , Valentino Black Multicolor Strap Mw2s0c28 Sandals , Oscar De La Renta Ankle Boot - Women Oscar De La Renta Ankle Boots online on YOOX United Kingdom - 11448733TK , Nike W Nike Roshe One Hyp Br - Sneakers - Women Nike Sneakers online on YOOX United Kingdom - 11043933LDGolden Goose Deluxe Brand Lilac Classic Distressed Superstar Sneaker Sneakers , ladies Tory Burch Black Thong Wedges Elegant shape , Valentino Pink Rockstud Ankle Strap Heel Sandalsman/woman Munro Kit Loafers Excellent functionFila Memory Tko Tr 5.0 Trail , Lacoste ESPARRE WINTER - High-top trainers - brownVans SK8-HI 138 - High-top trainers - black/white , adidas Originals SUPERSTAR FOUNDATION - Trainers Colour: core blackman/woman Chinese Laundry Nancy Boot Boots Optimal priceEl Naturalista AQUA - Classic heels Colour: blackPuma Sneakers - Men Puma Sneakers online on YOOX United Kingdom - 11326609RN , Camper Sneakers - Men Camper Sneakers online on YOOX United Kingdom - 11555984BXAdidas Reebok Classic WORKOUT PLUS - Trainers - soft camel/rustic winSelected Homme Sneakers - Men Selected Homme Sneakers online on YOOX United Kingdom - 11537175XAmens/womens Tommy Hilfiger Pala Sneakers & Athletic Tommy Hilfiger Contrary to the same paragraph , Barleycorn Sneakers - Women Barleycorn Sneakers online on YOOX United Kingdom - 11471144MA , Valleverde Ankle Boot - Women Valleverde Ankle Boots online on YOOX United Kingdom - 11553224CO , Marcela Yil Sandals - Women Marcela Yil Sandals online on YOOX United Kingdom - 11390665UA , Luca Valentini Court - Women Luca Valentini Courts online on YOOX United Kingdom - 11498846XMMarni Dark Green and Orange Sneakers , Z4wjH3AK Havaianas Slim Floral Flip Flop , buy online Diba True Landing Crew1vQrnsiF womens Frye Formal Shoes DiscountWOMENS BCBGMAXAZRIA Champagne Formal Shoes Big clearance sale ,
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.