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.Walk By Melluso Sneakers - Women Walk By Melluso Sneakers online on YOOX United Kingdom - 11535014EXLost Ink Ballet Flats - Women Lost Ink Ballet Flats online on YOOX United Kingdom - 11557842WD , s5G0LljR Grenat trainers , blue, Redskins , New Balance 996 Sophisticated - Sneakers - Women New Balance Sneakers online on YOOX United Kingdom - 11089174IM , FitFlop Timber Wolf New with Box Women's F Pop Canvas Oxford SneakersMISS Franco Sarto Suede Caged Sandals Discount , Raisie arlie leather brogues , black, Clarks , Scarpa MOJITO - Walking shoesGentle Souls by Kenneth Cole BariAdidas Ted Baker KAAWA - High heels - blackAdidas Liebeskind Berlin LOTTE - Espadrilles - ink blue , man/woman Lacoste Seforra Sneakers & Athletic Lacoste Great variety , Saucony FREEDOM ISO 2 - Neutral running shoesMen/Women Crocs Coast Clog Clogs & Mules comfortable , man/woman Volcom Herrington GTX Boot Boots First qualityHUF SOTO - Trainers - black , 2Star Sneakers - Men 2Star Sneakers online on YOOX United Kingdom - 11555262TINew Balance Sneakers - Men New Balance Sneakers online on YOOX United Kingdom - 11566553DI , Dondup Sneakers - Women Dondup Sneakers online on YOOX United Kingdom - 44715248HN , Springa Sneakers - Women Springa Sneakers online on YOOX United Kingdom - 11033931CBCalpierre Sandals - Women Calpierre Sandals online on YOOX United Kingdom - 11579648BQMagrit Court - Women Magrit Courts online on YOOX United Kingdom - 11566448XR , Lino Ricci Court - Women Lino Ricci Courts online on YOOX United Kingdom - 11543013JEBrawn's Ankle Boot - Women Brawn's Ankle Boots online on YOOX United Kingdom - 11175703EK , Packaging diversity Lucky Brand PincahUpper material Gola Coaster Spectrum , Dingo Camilla Kick up your heels in these beautiful Camilla boots! , J.Crew Black Double-strap Suede Slides with Pearls 5m J2589 Sandals , Ladies Ash Black Novak Platforms Crazy price , WOMENS St. John Heeled Sandals Qualified production ,
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.