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.Sergio Rossi Ankle Boot - Women Sergio Rossi Ankle Boots online on YOOX United Kingdom - 11462955PMRELINDA 733-8 ZAPATO PLANO PARA MUJERPITILLOS 2700 FASHION BALLERINAS FOR WOMEN , BRYAN 400 ZAPATO CONFORT DE MUJER , MISS Pura Lopez Nude/Pink/Beige Mary-jane Platforms Let our products go out into the world , Carhartt 6" Ground Force Waterproof Composite Toe Work Boot , Fendi Black Monster Bug Eyes Slip-on Sneakers 36.5 Sneakers , CLARKS Cordella Chant ZAPATO PLANO PARA MUJER , Nike White/Brown/Gold/Silver 2006 Air Max 95 SneakersWOMENS Prada Black Unisex Logo Sandals tender , adidas Originals NMD_R1 PK - Trainers Colour: sesame/offwhite , Espadrij l′originale CLASSIC - Espadrilles Colour: white , Adidas Tamaris Slip-ons - navy , Versace Jeans High-top trainers Colour: black , Adidas Puma RS-100 X POLAROID - Trainers - marshmallow/black , le coq sportif COURTSET SPORT - Trainers Colour: optical white/croissant , Adidas Vans CLASSIC SLIP-ON - Slip-ons - olivePremiata Boots - Men Premiata Boots online on YOOX United Kingdom - 11530912TAmen's/women's adidas Golf Adipure Tour Sneakers & Athletic adidas Golf Valuable boutiquemen's/women's Scott Kinabalu Enduro Sneakers & Athletic Scott Great varietyDansko Open-Toe Mules - Women Dansko Open-Toe Mules online on YOOX United Kingdom - 11370350WCE.G.J. Ankle Boot - Women E.G.J. Ankle Boots online on YOOX United Kingdom - 11506339FG , Cuplé Ballet Flats - Women Cuplé Ballet Flats online on YOOX United Kingdom - 11200135IE , sell Lacoste Marice 218 3 , Modern and elegant fashion Corral Boots A3164renewed on time Calvin Klein IgorExcellent quality Pikolinos Alcudia W1L-0917Authentic guarantee Steve Madden CaviarrTory Burch Trench Tan Mini Miller 45mm Micro Tejus Print In Tancolor. SandalsValentino White Metallic Stripe Leather Sneakers 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.