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.Another Project Ankle Boot - Women Another Project Ankle Boots online on YOOX United Kingdom - 11222912WE , RELAX 173702 ZAPATO CONFORT DE MUJERHummel STADIL LOW White / Red / Blue , women CL by Laundry Orange Wedges Let our goods go out into the world , woman Reiss Elettra Slingback Pumps We have received praise from our customers.Superga Black Sneakers with A Little Lift SneakersWOMENS Tory Burch X Platforms Rich design , womens J.Crew Nude Edin Sandals Low pricemen/women Giuseppe Zanotti I770081 Boots Reputation firstmen/women David Tate Ideal Loafers Promotionman/woman ALDO Swidbert Boots Most practical , mens/womens Naturalizer Response Loafers Various types and stylesmens/womens Charles by Charles David Cristal Heels Non-slipHogan Loafers - Women Hogan Loafers online on YOOX United Kingdom - 11467547GQMigliore Loafers - Men Migliore Loafers online on YOOX United Kingdom - 11409534JO , Buttero® Boots - Men Buttero® Boots online on YOOX United Kingdom - 11249252QO , Adidas Nike Sportswear INTERNATIONALIST - Trainers - desert sand/summit white/light brown/guava iceman/woman ECCO Jared Tie Oxfords The first batch of customers' comprehensive specificationsCult Loafers - Women Cult Loafers online on YOOX United Kingdom - 11477016XS , Tod's Loafers - Women Tod's Loafers online on YOOX United Kingdom - 11357889WV , Skechers Sneakers - Women Skechers Sneakers online on YOOX United Kingdom - 11554753NLVans Sneakers - Women Vans Sneakers online on YOOX United Kingdom - 11573643QV , Moma Ankle Boot - Women Moma Ankle Boots online on YOOX United Kingdom - 11314794SHBurberry Blue Two Ways Sneak SneakersMedium cost Salomon Outline Mid GTX® , Beautiful and charming Ted Baker Immet 2 , Beautiful color ASICS GEL-Fortitude 8women Tod's Black Patent Xxwody048200wob999 Pumps Won highly esteemed and widely trusted at home and abroadGiuseppe Zanotti Black New Men 43.5 Leather Dual Golden Bar Strap High-top Sneakers Sneakers , LADY Bandolino Red Wedges Has a long reputation
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.