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.Avril Gau Ankle Boot - Women Avril Gau Ankle Boots online on YOOX United Kingdom - 11539351FOBrunello Cucinelli Ankle Boot - Women Brunello Cucinelli Ankle Boots online on YOOX United Kingdom - 11515077EHWhat For Ankle Boot - Women What For Ankle Boots online on YOOX United Kingdom - 11540314QPProenza Schouler Ankle Boot - Women Proenza Schouler Ankle Boots online on YOOX United Kingdom - 11483170QUFornarina Ankle Boot - Women Fornarina Ankle Boots online on YOOX United Kingdom - 11493822KRTITI COUTURE Timw07po MENORQUINA PARA MUJERLadies Vince Berlin-6flint Suede Sneakers brandG.P. Per Noy Bologna Ankle Boot - Women G.P. Per Noy Bologna Ankle Boots online on YOOX United Kingdom - 11549261XDTosca Blu Shoes Ankle Boot - Women Tosca Blu Shoes Ankle Boots online on YOOX United Kingdom - 11516963CWMTNG 69562 C23553 Pano Amarill TRAINERS FOR WOMENLADY Air Jordan Burgundy Sneakers Sneakers Fashion pattern , man/woman Dune London Helenat Heels reliable qualityCorail fleece-lined ankle boots , camel, Les Tropeziennes Par M.Belarbi , Adidas Felmini COOPER - Cowboy/Biker boots - targoff etwamen's/women's Superfeet Stuart Sneakers & Athletic Superfeet Reliable reputationmens/womens Tommy Bahama Waldon Thong Sandals Popular recommendationLino leather ankle boots , grey, Kaporal 5 , Pollini Court - Women Pollini Courts online on YOOX United Kingdom - 11446707GW , Men/Women Franco Sarto Cutler Wide Calf Boots Has a long reputationman/woman DV by Dolce Vita Proxy Sneakers & Athletic DV by Dolce Vita cheaperLella Baldi Sandals - Women Lella Baldi Sandals online on YOOX United Kingdom - 44925467CH , Maison Margiela Loafers - Women Maison Margiela Loafers online on YOOX United Kingdom - 11341739PKOrMLNxrf Palladium Pampa Hi Lite KaxDOzAuZ Ariat ATS® Square Toe FootbedElegant and stable packaging SKECHERS GOrun Forza 3 , At an affordable price TKEES Foundation MatteLush design Ariat Venttek UltraNike Gray Men's Lunar Skyelux Running New In Box SneakersSam Edelman Blue Lelani Faux Feather Leather Jeweled Sneakers Sneakerswomens Prada Black 39 Sandals Comfortable touch
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.