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.Agile By Rucoline Sneakers - Women Agile By Rucoline Sneakers online on YOOX United Kingdom - 11496592QPFederica Stella Ankle Boot - Women Federica Stella Ankle Boots online on YOOX United Kingdom - 11572352HB , adidas Performance PREDATOR TANGO 18.4 IN - Indoor football boots - solar yellow/core black/solar red , MISS Burberry Multicolor Wedges Different productsFb1cteHO Men/Women Vaneli Welda Sandals wonderful , SEjzk4w7 men's/women's Clergerie Abricet Heels unique , Fenty Puma By Rihanna Open-Toe Mules - Women Fenty Puma By Rihanna Open-Toe Mules online on YOOX United Kingdom - 11363990PHWomen's Stuart Weitzman Black/Rhinestone Formal Shoes in short supplyAVISPAS Botin Sra WEDGE ANKLE BOOTS FOR WOMENwomens Christian Louboutin Black Silver Platforms New designLadies Robert Clergerie Khaki /Puter Platforms newcomerLadies Valentino Camo Rockstud Sandals Popular recommendationmen/women Schutz Spring Heel Heels Special purchase , Adidas Bullboxer Cowboy/Biker boots - dark greenTD by True Decadence High heels Colour: pinkSantoni Sneakers - Women Santoni Sneakers online on YOOX United Kingdom - 11543350AU , Leather Crown Boots - Men Leather Crown Boots online on YOOX United Kingdom - 11532009IGSebastian Ankle Boot - Women Sebastian Ankle Boots online on YOOX United Kingdom - 11522051BBSergio Rossi Loafers - Women Sergio Rossi Loafers online on YOOX United Kingdom - 11455480ACHannibal Laguna Court - Women Hannibal Laguna Courts online on YOOX United Kingdom - 11543629MXPrimafila Ankle Boot - Women Primafila Ankle Boots online on YOOX United Kingdom - 11504562LA , N° 21 Sandals - Women N° 21 Sandals online on YOOX United Kingdom - 11479420RXyiISpXlW L'Artiste by Spring Step MartyCharacteristics Chinese Laundry Jessa SandalPromotion G by GUESS Banx4 , Global sales Sam Edelman Bernice , Complete specification English Laundry Dovey , Reliable performance Frye Murray ChukkaLADY Maison Margiela Blue Shoes-2371 Sandals Strong heat and wear resistance , Marc by Marc Jacobs White Buckle Strap 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.