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.Bruno Bordese Ankle Boot - Women Bruno Bordese Ankle Boots online on YOOX United Kingdom - 11496643NCBruno Premi Ankle Boot - Women Bruno Premi Ankle Boots online on YOOX United Kingdom - 11515278QK , Mega NRGY Knit Women's Trainers | Blue Indigo-Puma WhiteLiu ?Jo Shoes Court - Women Liu ?Jo Shoes Courts online on YOOX United Kingdom - 11366035XUWOMEN Prada Red Slides Sandals Strong heat and wear resistance , woman ALDO Cream Lococo Sandals clearance sale , Ballet pumps , black, La Redoute Collections , Adidas Versace Jeans Trainers - grigio , Tom Joule WELLYPRINT - Wellies Colour: blackSKECHERS Flex Appeal 2.0 - EstatesGrand leather ankle boots , dark brown, Kaporal 5Men/Women Marc Jacobs Reed Flats Stylish and charmingAdidas Pier One Wide Fit WIDE FIT - Ankle boots - black , Converse CHUCK TAYLOR ALL STAR '70 OX - Trainers Colour: green/black/egretAdidas | Adidas Soccer Nemeziz Tango sneakers 17.1 in black cp9118Ruco Line Boots - Men Ruco Line Boots online on YOOX United Kingdom - 11478046XU , Under Armour Sneakers - Men Under Armour Sneakers online on YOOX United Kingdom - 11468055GXEmporio Armani Boots - Men Emporio Armani Boots online on YOOX United Kingdom - 11373110RVTsd12 Sneakers - Women Tsd12 Sneakers online on YOOX United Kingdom - 11453955NCApepazza Sandals - Women Apepazza Sandals online on YOOX United Kingdom - 11393927FJ , Rodo Boots - Women Rodo Boots online on YOOX United Kingdom - 11466376OB , Ebarrito Court - Women Ebarrito Courts online on YOOX United Kingdom - 11551862BHP13 Sneakers - Women P13 Sneakers online on YOOX United Kingdom - 11086553LT , Rachel Zoe Sandals - Women Rachel Zoe Sandals online on YOOX United Kingdom - 11265131JG , I Am Sandals - Women I Am Sandals online on YOOX United Kingdom - 11421034VG , Patrizia Pepe Sneakers - Men Patrizia Pepe Sneakers online on YOOX United Kingdom - 11564731PF , ladies Superga Black 2260 Sneakers bestsell , MISS Dune London Black Karley Wedges High quality and economy , LADY Sam Edelman Brown Annabel Wedges Charming designwoman Jimmy Choo Black Octo Sandals quality ,
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.