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.Giuseppe Di Dato Court - Women Giuseppe Di Dato Courts online on YOOX United Kingdom - 11553481PLWOMEN Fendi Spuntana Colbro Lucido Platforms For your choice , women Tory Burch Millers Sandals High quality and economy , MISS Grey Betty Platforms Online export businessMen/Women Miz Mooz Finn Oxfords Moderate pricemens/womens Geox WJALEAH3 Heels Sales ItalySteve Madden SHINE - High heeled ankle boots Colour: silverReebok | Reebok Classic nylon sneakers in black 6604 , Men/Women élysèss Sandals New in stock , Brawn's Boots - Men Brawn's Boots online on YOOX United Kingdom - 11527256FNPantanetti Boots - Men Pantanetti Boots online on YOOX United Kingdom - 11510390SSVans Sneakers - Men Vans Sneakers online on YOOX United Kingdom - 11483537LCmen's/women's Stuart Weitzman Nudistsong Heels Ranked first in its class , L'f Shoes Loafers - Men L'f Shoes Loafers online on YOOX United Kingdom - 11480746XMPassion Blanche Loafers - Men Passion Blanche Loafers online on YOOX United Kingdom - 11384062ND , Deimille Sandals - Women Deimille Sandals online on YOOX United Kingdom - 11537036XK , Carmens Boots - Women Carmens Boots online on YOOX United Kingdom - 11481658NTLerre Court - Women Lerre Courts online on YOOX United Kingdom - 11508588JS , Roger Vivier Court - Women Roger Vivier Courts online on YOOX United Kingdom - 11501708XC , Alaïa Ankle Boot - Women Alaïa Ankle Boots online on YOOX United Kingdom - 11567887EE , Sergio Rossi Sandals - Women Sergio Rossi Sandals online on YOOX United Kingdom - 11412346NAGianvito Rossi Sandals - Women Gianvito Rossi Sandals online on YOOX United Kingdom - 11139737AHVans Hello Kitty Anniversary Kid's SneakersWOMENS OTBT Black Wedges Elegant appearance , WOMEN BCBGMAXAZRIA Lilac Sandals Quality firstElegant appearance Deer Stags Bowen LoaferNike Bright Crimson/ Rasberry Red/Laser Orange/White Flyknit 4.0 Sneakers , Converse Multi Color/ Red White and Blue Converse/1v831 SneakersLADY Jimmy Choo Black Prova Platforms First quality , women Nike Pink/Multi-color Free 5.0 Sneakers durability
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.