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.Maria Cristina Ankle Boot - Women Maria Cristina Ankle Boots online on YOOX United Kingdom - 11519847DFIslo Isabella Lorusso Sneakers - Women Islo Isabella Lorusso Sneakers online on YOOX United Kingdom - 11474668FCMarco Barbabella Ballet Flats - Women Marco Barbabella Ballet Flats online on YOOX United Kingdom - 11380696SHDolce & Gabbana Sneakers - Men Dolce & Gabbana Sneakers online on YOOX United Kingdom - 11366273TG , Cedric Charlier Sneakers - Women Cedric Charlier Sneakers online on YOOX United Kingdom - 11365063UIBruno Premi Sandals - Women Bruno Premi Sandals online on YOOX United Kingdom - 11484146NOLella Baldi Sandals - Women Lella Baldi Sandals online on YOOX United Kingdom - 44981116AMPANAMA JACK Dori Basics B3 Napa Grass Taupe SANDALIA PLANA DE MUJERwomen Vince Camuto Tan Zipper Sandals new entry , PEPE JEANS Pls30694 LOW-TOP TRAINERS FOR WOMEN , womens adidas Purple Neo Sneakers Reliable quality , mens/womens CLOSED Trainers Good marketman/woman Kamik Haley Boots Orders are welcomemen/women Caparros Claudia Heels Modern technology , Emporio Armani Trainers - navyEA7 Emporio Armani TOP - High-top trainers - white , Vaude WO TVL SKOJ - Cycling shoes Colour: alpine lakeSantoni Boots - Men Santoni Boots online on YOOX United Kingdom - 11286431HNWeg Boots - Men Weg Boots online on YOOX United Kingdom - 11550919SJman/woman G.H. Bass & Co. Abbott Boots Has a long reputationWomsh Sneakers - Women Womsh Sneakers online on YOOX United Kingdom - 11241738DG , Marian Ankle Boot - Women Marian Ankle Boots online on YOOX United Kingdom - 11503764CTAlbano Ankle Boot - Women Albano Ankle Boots online on YOOX United Kingdom - 11528551DMBianca Di Court - Women Bianca Di Courts online on YOOX United Kingdom - 11451973WHPhilippe Model Sneakers - Women Philippe Model Sneakers online on YOOX United Kingdom - 11478431WO , British temperament Spring Step MarilenaModerate cost Corral Boots C3373Dingo Wrigley The stylishly sassy look of the Dingo Wrigley boot will add a little Western flair to any look , Women's Dior Black Fao614 Formal Shoes Orders are welcome , ladies London Trash Pink Platforms First quality
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.