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.Manila Grace Denim Court - Women Manila Grace Denim Courts online on YOOX United Kingdom - 11327339JK , Tosca Blu Shoes Sandals - Women Tosca Blu Shoes Sandals online on YOOX United Kingdom - 11571701WA , CLARKS Kendra Daisy SHOES FOR WOMEN , OTAZUA 20014 BOTíN PLANO DE MUJER , Nila & Nila Sneakers - Women Nila & Nila Sneakers online on YOOX United Kingdom - 11476789XFALBANO 8050-albano FASHION ANKLE BOOTS FOR WOMEN , mens/womens Florsheim Riptide Oxford Oxfords Moderate pricemen's/women's Calvin Klein Norm Oxfords discount priceVans OLD SKOOL - Skate shoes , men/women Born Tinetto Loafers Outstanding stylemens/womens Vans Slip-On Lite Sneakers & Athletic Vans buyNew Look MARLE RUNNER - Trainers - navy , Reebok Classic CLUB C 85 - Trainers Colour: white/rainbowmens/womens Free People Rosie Ruffle Heel Heels cheaperAdidas Pier One Winter boots - grey , Panama Jack FELIA IGLOO - Cowboy/Biker bootsSantoni Loafers - Men Santoni Loafers online on YOOX United Kingdom - 11541335CACasablanca 1942 Loafers - Men Casablanca 1942 Loafers online on YOOX United Kingdom - 11519431ND , Lemaré Sneakers - Women Lemaré Sneakers online on YOOX United Kingdom - 11456229IQ , Stokton Sneakers - Women Stokton Sneakers online on YOOX United Kingdom - 11287840AORock Spring Sneakers - Women Rock Spring Sneakers online on YOOX United Kingdom - 11561182BXEliana Bucci Loafers - Women Eliana Bucci Loafers online on YOOX United Kingdom - 11533072NK , Alberta Ferretti Sandals - Women Alberta Ferretti Sandals online on YOOX United Kingdom - 11498583NNGiuseppe Zanotti Sneakers - Women Giuseppe Zanotti Sneakers online on YOOX United Kingdom - 11375819BF , Ladies Ash Bowie Sneakers retail price , Excellent craft Caterpillar Jace Steel Toe , feature Donald J Pliner Norm , Highly appreciated and widely trusted in and out SKECHERS Elite Flex Westerfeld , lady Birkenstock Beige Tatami Gladiator Sandals Win the praise of customerswomen Tory Burch Black Astoria Wedges to buy ,
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.