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.Madame Ines Sneakers - Women Madame Ines Sneakers online on YOOX United Kingdom - 11459257KLMaria Cristina Court - Women Maria Cristina Courts online on YOOX United Kingdom - 11505519AO , LADY Prada Black/Pink 356240 Sneakers Wholesale5ImiAwqm men's/women's Cordani Keane Heels sell , Oim By Silvana Lauri Court - Women Oim By Silvana Lauri Courts online on YOOX United Kingdom - 11504897DV , J|D Julie Dee Ankle Boot - Women J|D Julie Dee Ankle Boots online on YOOX United Kingdom - 11227213MX , LADY Prada Pink Patent Wedges Different styles and styles , ladies Diesel Red D-icon Women Sneakers retail price , Bates Footwear Raide Mid Leather Sport TacticalLADY Henry Cuir Brown Sandals Sale Italy , men's/women's ALDO Learia Heels Diverse new design , EGO CIARA - High heels Colour: blue , Bugatti TOTTI EVO - Slip-ons Colour: blackNew Balance NYC Fresh Foam Zante v3Jeffrey Campbell SIREN - Wedge boots Colour: fuchsia neonNike SB BRUIN MAX VAPOR - Trainers - black/black , men/women Badgley Mischka Kelly II Heels have fun , men/women LifeStride Greta Heels High quality and cheap , Asfvlt Sneakers - Men Asfvlt Sneakers online on YOOX United Kingdom - 11356799GFmens/womens Keds Triple Little Miss Chatterbox Sneakers & Athletic Keds Famous store , BOSS CARDIFF CHEB - Classic ankle boots - black , Pantofola D'oro Sneakers - Men Pantofola D'oro Sneakers online on YOOX United Kingdom - 11455644GH , Fabi Ankle Boot - Women Fabi Ankle Boots online on YOOX United Kingdom - 11537837MBDiesel Ankle Boot - Women Diesel Ankle Boots online on YOOX United Kingdom - 11308842NLJueTTOXr SKECHERS 15617 TRAINERS FOR WOMEN , Many styles Cycleur de Luxe Crush , Various New Balance Numeric NM213buy online Tamaris Congo 1-1-22422-20LADY Tory Burch Black Claremont Wedges retail pricewomens Stuart Weitzman Tan Espadrille Wedges bestsell
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.