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.Saucony Dxn Trainer W - Sneakers - Women Saucony Sneakers online on YOOX United Kingdom - 11017410EKDolce & Gabbana Court - Women Dolce & Gabbana Courts online on YOOX United Kingdom - 11508351JBEye Ankle Boot - Women Eye Ankle Boots online on YOOX United Kingdom - 11518013DTLOLAS S047401393mba FASHION SANDALS FOR WOMENCALLAGHAN 14810.4 PLATFORM SHOES FOR WOMENVince Black Warner Platform Sneaker Sneakers , Ovye' By Cristina Lucchi Sandals - Women Ovye' By Cristina Lucchi Sandals online on YOOX United Kingdom - 11336094KDladies Zara Strap Heel Sandals Modern and stylish fashion , The North Face Storm III Mid WPAquatalia Black Brennan Open Toe Strappy SandalsVera Wang Silver Metallic Rhinestone Heels SandalsMaria Mare VERA - Sandals Colour: afelpado nude , mens/womens Rebecca Minkoff Abigail Boots Popular recommendationmens/womens ALDO Carerith Heels Year-end special promotions , man/woman Acorn Acorn Moc Summerweight Slippers business , New Look VALUATE - Sandals Colour: oatmealSKECHERS Street Hi Lites - Doodle BookAdidas | Adidas Running PureBoost dpr in navy bb6293 , Skechers Sport HANIGER CASSPI - Trainers - white/navyVans ULTRARANGE - Skate shoes - cub/marshmallow , Tribal print heels , black/white, La Redoute Collections , G-One Sneakers - Men G-One Sneakers online on YOOX United Kingdom - 11533562MKMen/Women A2 by Aerosoles Architect Flats a wide range of products , Daniele Alessandrini Sneakers - Men Daniele Alessandrini Sneakers online on YOOX United Kingdom - 11557347HC , Tod's Ankle Boot - Women Tod's Ankle Boots online on YOOX United Kingdom - 11543417RG , Comfortable touch rag & bone PaigeArche Kloral Make your jeans sizzle with the Kloral ankle boot from Arche® , LADY DbDk Black Sandals Wedges Highly appreciated and widely trusted in and outLadies Prada Pewter Square-toe Pumps Platforms New products in 2351WOMENS Christian Louboutin Vero Cuoio Pumps durable ,
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.