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.Sam Edelman Ankle Boot - Women Sam Edelman Ankle Boots online on YOOX United Kingdom - 11468110CLLOTTUSSE S8599 ZAPATO PLANO PARA MUJERFLUCHOS 336 CASUAL SHOES FOR MANMARTINELLI 1010011-martinelli FASHION FOOTWEAR FOR MENlady Stuart Weitzman Espadrille Wedges High quality , fMMuNmHl Men/Women Unisa Elanna Heels use , Chie By Chie Mihara Chie_Analu6, - Sandals - Women Chie By Chie Mihara Sandals online on YOOX United Kingdom - 11213697PXOTAZUA 208450 Hasta Talla 42 WEDGE ANKLE BOOTS FOR WOMEN , MISS Birkenstock Bronze Mayari Sandals Rich on-time deliveryman/woman SAS Scarlett Heels Current shapeInglesa lona trainers , white, VictoriaKIOMI Smart slip-ons - blackPuma NRGY NEKO - Stabilty running shoes - peacoat/white , Men/Women Vans SK8-Hi? Sneakers & Athletic Vans Beautiful colorChurch's Boots - Men Church's Boots online on YOOX United Kingdom - 11567911XDMinoronzoni Loafers - Men Minoronzoni Loafers online on YOOX United Kingdom - 11514958MF , Lumberjack Sneakers - Men Lumberjack Sneakers online on YOOX United Kingdom - 11552104TJ , Cat Loafers - Men Cat Loafers online on YOOX United Kingdom - 11555704WODiemme Sneakers - Men Diemme Sneakers online on YOOX United Kingdom - 11500517KAGeox Loafers - Men Geox Loafers online on YOOX United Kingdom - 11183779QTTod's Loafers - Men Tod's Loafers online on YOOX United Kingdom - 11299262HEGuess Sandals - Women Guess Sandals online on YOOX United Kingdom - 11131544HPCafènoir Sandals - Women Cafènoir Sandals online on YOOX United Kingdom - 11337026GD , Anteprima Sandals - Women Anteprima Sandals online on YOOX United Kingdom - 11471199SP , Alberto Guardiani Sneakers - Women Alberto Guardiani Sneakers online on YOOX United Kingdom - 11267412UN , krNog3w9 Charlotte Olympia Kitty Pool SlidersElegant and solemn Frye Demi Zip Bootie , Many varieties La Canadienne Passion , special promotion Giorgio Brutini Lorenzo , Miu Miu Blush Patent Leather 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.