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.Dolce & Gabbana Sneakers - Women Dolce & Gabbana Sneakers online on YOOX United Kingdom - 11557619GTGaia D'este Sandals - Women Gaia D'este Sandals online on YOOX United Kingdom - 11156883DMMuse Echo Women's Sneakers | Rock Ridge , Nine West Metallic Silver W Stones Flat Glamorous Sandals , BOSS Hugo Boss Hybrid Running Sneaker By HugoAntony Morato Trainers - teak , Lacoste AMPTHILL - High-top trainersAdidas San Marina AGUJA - High heels - petroleSuperdry SCUBA SPORT RUNNER - Sports shoes Colour: black/dark greymen/women Kamik Pepper Boots Contrary to the same paragraphmens/womens Cole Haan Dustin Penny II Loafers Pleasant appearance , Men/Women Donald J Pliner Rowen Sandals Customer firstLK Bennett NIAMH - Classic heels Colour: black , Blundstone Boots - Men Blundstone Boots online on YOOX United Kingdom - 11493146GE , Varese Loafers - Men Varese Loafers online on YOOX United Kingdom - 11462964MQValleverde Sneakers - Men Valleverde Sneakers online on YOOX United Kingdom - 11549210FABurberry Sneakers - Men Burberry Sneakers online on YOOX United Kingdom - 11570886XIEn Avance Boots - Men En Avance Boots online on YOOX United Kingdom - 11503915SAConverse CHUCK TAYLOR ALL STAR '70 HI - High-top trainers - shoreline blue/black/egret , Ras Loafers - Women Ras Loafers online on YOOX United Kingdom - 11319809BAStrategia Sandals - Women Strategia Sandals online on YOOX United Kingdom - 11378816TI , Ash Ankle Boot - Women Ash Ankle Boots online on YOOX United Kingdom - 11476022FX , Francesca Conoci Loafers - Women Francesca Conoci Loafers online on YOOX United Kingdom - 11435109IKSilvano Sassetti Sandals - Women Silvano Sassetti Sandals online on YOOX United Kingdom - 11562379FJ , Easy life Minnetonka Velvet Floral CallyClever and practical Pikolinos Vicar W0V-8610 , Liu •Jo Shoes Sandals - Women Liu •Jo Shoes Sandals online on YOOX United Kingdom - 11090932CLWOMENS Arturo Chiang Cognac Carlotta Sandals Special promotions at the end of the year , Nike Olive Green Black Purple White Airmax Sneakers , Balenciaga Race Runner Sneakers 39 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.