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.Alberto Fermani Ankle Boot - Women Alberto Fermani Ankle Boots online on YOOX United Kingdom - 11535180DDSalvatore Ferragamo Ankle Boot - Women Salvatore Ferragamo Ankle Boots online on YOOX United Kingdom - 11497687XW , O5f3C9CF man/woman BCBGeneration Rocko Boots value , Birkenstock GIZEH Python / GoldLADY Banana Republic Gold Espadrilles Wedges High quality and economy , woman Birkenstock Brown Arizona Sandals High quality and low effort , WOMENS Diane von Furstenberg Snake Sandals First group of customers , FOXY UP F39-890 Camel Marron BOTA OUTDOOR PARA MUJERLouise et Cie Black Apolla Leather Gladiators Sandals , lady Sophia Webster Sandals At a lower priceIsabel Marant Dark Grey Bobby Wedge Sneakers , men's/women's Touch Ups Dana Heels Outstanding featuresDC Shoes PURE - Skate shoesAdidas Esprit FILO BUC - Trainers - blackReebok Classic REVENGE PLUS - Trainers - cloud grey/chalk/redD janira c leather wedge sandals , camel, GeoxTed Baker | Ted Baker Heby sneakers in navy , man/woman Jil Sander Navy JN29031 Heels New design , men's/women's Franco Sarto Aberdale Boots Practical and economical , Santoni Boots - Men Santoni Boots online on YOOX United Kingdom - 11525247CN , ASOS DESIGN | ASOS DESIGN Chelsea Boots In Brown Leather With Strap Detail , man/woman Volcom New School 2 Sandals Elegant and sturdy set meal , men's/women's VIONIC Elevated Stanton Wedge Boots a lot of varietiesNike Performance FREE RUN FLYKNIT 2018 - Trainers - diffused blue/thunder blue/blue void/football grey , Sebastian Sandals - Women Sebastian Sandals online on YOOX United Kingdom - 11517531LRDonna Più Boots - Women Donna Più Boots online on YOOX United Kingdom - 11526852XPRas Ballet Flats - Women Ras Ballet Flats online on YOOX United Kingdom - 11572608UL , At a lower price Spring Step VanishValuable boutique Via Spiga HalinaFitFlop Red Banda Perf Wedge Perforated Flip Flops Dusty / 36 E Sandals ,
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.