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.Lorenzo Mari Sandals - Women Lorenzo Mari Sandals online on YOOX United Kingdom - 11436582VOMISS Sesto Meucci Wedges quality products , La Corte Della Pelle By Franco Ballin Ankle Boot - Women La Corte Della Pelle By Franco Ballin Ankle Boots online on YOOX United Kingdom - 11477744EE , La Corde Blanche Espadrilles - Women La Corde Blanche Espadrilles online on YOOX United Kingdom - 11268466SB , Nike Black and Multi Colored Lebron Xii Gs Sneakers , REFRESH 61746 Lon.c. Negro WEDGE-HEEL SANDALS FOR WOMENXTI 46579 Combinada Taupe WEDGE-HEEL SANDALS FOR WOMENwoman Bruno Magli Mauve Wedges Big saleMen/Women Clarks Sillian Tana Boots Packaging diversity , Etnies JEFFERSON MID - Skate shoes , Polo Ralph Lauren SHAW - High-top trainers - black , Men/Women Clarks Un.Elott Plain Oxfords for you to chooseP. vallarta 655 leather wedge sandals , white, Pikolinos , Reebok Classic CLUB C 85 EMBOSS - Trainers , man/woman Tunis sandals , black, Birkenstock Shoes service , Pier One T-bar sandals - dark denimHogan Sneakers - Men Hogan Sneakers online on YOOX United Kingdom - 11560587OVCamper Boots - Men Camper Boots online on YOOX United Kingdom - 11393568QUMen/Women bernie mev. TW 97 Sneakers & Athletic bernie mev. Environmentally friendly , men's/women's Charles by Charles David Azie Heels King of the crowdmens/womens Sigerson Morrison Gemma Boots As of the latest modelDeimille Court - Women Deimille Courts online on YOOX United Kingdom - 11448882DK , Strategia Court - Women Strategia Courts online on YOOX United Kingdom - 11393534KK , Michel Vivien Loafers - Women Michel Vivien Loafers online on YOOX United Kingdom - 11542046AN , Tamara Mellon Sandals - Women Tamara Mellon Sandals online on YOOX United Kingdom - 11119221ED9NxWQcDD Tommy Bahama Whykiki Flat Solid , lIx0U25u SKECHERS Work Ghenter - BronaughOnline Shopping Trask Parker PerfBeautiful appearance Frye Chris Venetian , womens Black Seymour Wedges Win the praise of customers ,
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.