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.Skechers BURST Black / Pink , Genny Lav. Artigiana Varese Loafers - Men Genny Lav. Artigiana Varese Loafers online on YOOX United Kingdom - 11504614MF , Tosca Blu Shoes Court - Women Tosca Blu Shoes Courts online on YOOX United Kingdom - 11326345ACLADY Gianvito Rossi Cheyenne Ankle-tie Sandals Cheaper than the price , CALIFERS Abotinados Mujer Piel Denise Ja5004p68-negro SHOES FOR WOMENVans Blanc De Blanc Sk8 - High Top SneakersGERRY WEBER G14017 FASHION FOOTWEAR FOR WOMENman/woman Jewel Badgley Mischka Anastasia Boots business , Birkenstock BAKKI - Ankle boots Colour: graphitemen/women Tahari Venus Flats Medium costLFL by Lust For Life AtlasMen/Women Frye Jane Strappy Boots Fashion versatile shoesTod's Loafers - Women Tod's Loafers online on YOOX United Kingdom - 11569965PDHogan Sneakers - Men Hogan Sneakers online on YOOX United Kingdom - 11560724PVNew Look Wide Fit WIDE FIT SAMARA - High heels Colour: oatmeal , mens/womens Helia High heeled sandals Cheaper than the price , mens/womens Frye Ricki Ring Strap Boots Elegant and sturdy set mealAdidas Kenneth Cole New York MADDOX - Trainers - black/redGrandinetti Sandals - Women Grandinetti Sandals online on YOOX United Kingdom - 11460562PJEbarrito Sneakers - Women Ebarrito Sneakers online on YOOX United Kingdom - 11458896QOCriteria Sandals - Women Criteria Sandals online on YOOX United Kingdom - 11535723IQ , E...Vee Boots - Women E...Vee Boots online on YOOX United Kingdom - 11492406TL2Star Sneakers - Women 2Star Sneakers online on YOOX United Kingdom - 11453590PMVic Matiē Loafers - Women Vic Matiē Loafers online on YOOX United Kingdom - 11536017FBThe Seller Boots - Women The Seller Boots online on YOOX United Kingdom - 11497329RV , low cost Bed Stu Louis , Tory Burch Normandy Blue Emmy Demi Wedge Tumbled Leather Strappy Logo SandalsKenneth Cole Black New York Kam Fashion Sneakers Sneakerswomens ALDO Black Gron-96 Wedges to buyWOMEN Buscemi White/Clear Strap Slide Sandals Wholesale ,
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.