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.Dolce & Gabbana Sneakers - Men Dolce & Gabbana Sneakers online on YOOX United Kingdom - 11507020KIman/woman Kenneth Cole New York Kam Sneakers & Athletic Kenneth Cole New York List of explosionsCamper Oruga Sandal - Sandals - Men Camper Sandals online on YOOX United Kingdom - 11435865JJEbarrito Ankle Boot - Women Ebarrito Ankle Boots online on YOOX United Kingdom - 11458078HA , Mephisto Wedge Camel Lizard Minoa Sandals , Kat Maconie Whitney - Ankle Boot - Women Kat Maconie Ankle Boots online on YOOX United Kingdom - 11566855JC , Steve Madden Vanessa Slipper - Sandals - Women Steve Madden Sandals online on YOOX United Kingdom - 11438894QO , Stuart Weitzman White Patent Leather Made In Spain Sandals , YOKONO Bari 009 Marron SANDALIA BIO PARA MUJERlady Diane von Furstenberg Bronze Platforms Pleasant feeling , lady Liz Claiborne Black Sandals Great classificationJewel Badgley Mischka Claire by Jewel Badgley MischkaBirkenstock AMSTERDAM - Slippers Colour: light bluemen's/women's Cole Haan Kadi Sandal Heels Practical and economical , man/woman To Boot New York Emmett Oxfords low costmens/womens Rieker 43754 Mirjam 54 Heels Reliable performance , Jax leather ankle boots , dark brown, Levi'sBianco CLASSIC CHELSEA - Ankle boots Colour: blackPawelk's Boots - Men Pawelk's Boots online on YOOX United Kingdom - 11358388DUmens/womens Brighton Ray Clogs & Mules for you to choose , Ash Sneakers - Women Ash Sneakers online on YOOX United Kingdom - 11513529LKVeronique Branquinho Boots - Women Veronique Branquinho Boots online on YOOX United Kingdom - 11489226GS , Alberta Ferretti Sandals - Women Alberta Ferretti Sandals online on YOOX United Kingdom - 11326820AV , Manuel Barceló Sneakers - Women Manuel Barceló Sneakers online on YOOX United Kingdom - 11534845FJ , women Tan None Platforms International choice , Nqn9UZzL Tory Burch Caterina Ballet Flat , zEO2gl3P lady J.Crew Halsey Sandals Cheap , Sanita Cosmo You'll be thanking your lucky stars for the incredible comfort that comes with the Cosmo from Sanitalady Black Leisel Studded Sandals Strong heat and heat resistanceFootJoy Beige and White Woman Golf Classics By Sneakers ,
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.