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.Liu ?Jo Shoes Court - Women Liu ?Jo Shoes Courts online on YOOX United Kingdom - 11078325OAIslo Isabella Lorusso Sneakers - Women Islo Isabella Lorusso Sneakers online on YOOX United Kingdom - 11471320GU , Men/Women Anne Klein Ovi Flats Won highly appreciated and widely trusted at home and abroad , Max Bianco Court - Women Max Bianco Courts online on YOOX United Kingdom - 11493821VTJANET&JANET 37607-janet&janet FASHION SANDALS FOR WOMENDibrera By Paolo Zanoli Boots - Women Dibrera By Paolo Zanoli Boots online on YOOX United Kingdom - 11446821MR , women Call It Spring Black Wedges The first set of comprehensive specifications for customers , MISS Sperry Cream and Tan Wedges Make full use of materialsKICKERS 609800-50 Picweek 53 Bleu SANDALIA BIO PARA MUJER , Christian Louboutin Multi Color Cataclou 60 Cork Sandals , Seychelles BC Footwear By Seychelles - DepthCLARKS Tri Bella ZAPATO PLANO PARA MUJERladies 5/48 Mustard Heidi Wedges Online shopwoman Pura Lopez Black Sandals official websiteBirkenstock ARIZONA - Pool sliders Colour: soft yellow , Men/Women Dolce Vita Brooks Heels best sellerAdidas Gabor Platform heels - camino , Wl520rs trainers , white, New BalanceMen/Women SAS Tour Sneakers & Athletic SAS Direct businessAdidas CTWLK DAMA - Classic heels - blackmen's/women's Vince Camuto Driton Heels Make full use of materialsPinko Sandals - Women Pinko Sandals online on YOOX United Kingdom - 11399144KH , Vicini Court - Women Vicini Courts online on YOOX United Kingdom - 11488079OKMissoni Espadrilles - Women Missoni Espadrilles online on YOOX United Kingdom - 11339847VQCalpierre Ankle Boot - Women Calpierre Ankle Boots online on YOOX United Kingdom - 11539873ER , Charlotte Olympia Boots - Women Charlotte Olympia Boots online on YOOX United Kingdom - 11495292HSEmanuela Passeri Loafers - Women Emanuela Passeri Loafers online on YOOX United Kingdom - 11444643XW , Seasonal hot sale Badgley Mischka HildaAcne Studios Red / Black Adriana Grain / Sneaker SneakersAsics Bright Orange/Red Pepper/Flash Yello Gel-noosa Tri 9 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.