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.Novelty Ankle Boot - Women Novelty Ankle Boots online on YOOX United Kingdom - 11464638LKNike Air Zoom Pegasus 35 FlyEase , Donald J. Pliner Red Fifi Sandalsadidas By Stella McCartney Semi Flash Orange/Flash Red/Ch Solid Grey Stellasport Women Training Yvori Sneakers , Nunn Bush Dixon Cap Toe Oxford with KORE Walking Comfort Technology , NEW BALANCE Mrl 420 Sq LOW-TOP TRAINERS FOR WOMEN , womens Calvin Klein Black Natania Sandals New designwomen Black Ysl Platforms Economical and practicalmen's/women's Naot Almeria Boots main category , mens/womens SoftWalk Fairhill Boots Various stylesmens/womens Sam Edelman Luisa Sandals Clearance , Men/Women Naturalizer Talli Heels Global salesLosers Sneakers - Men Losers Sneakers online on YOOX United Kingdom - 11580525LHGeox Sneakers - Men Geox Sneakers online on YOOX United Kingdom - 11414745SM , Adidas | Adidas Basketball crazy light boost 2018 sneakers in navy db1068Adidas adidas Originals CAMPUS - Trainers - chalk orange/footwear white/crystal whitemens/womens adidas Barricade 2018 Boost Sneakers & Athletic adidas SellingP448 Sneakers - Women P448 Sneakers online on YOOX United Kingdom - 11456889TF , Rouge Court - Women Rouge Courts online on YOOX United Kingdom - 11524974WR , Casadei Court - Women Casadei Courts online on YOOX United Kingdom - 11494367VW , Jerold Wilton Boots - Women Jerold Wilton Boots online on YOOX United Kingdom - 11533275HU , Fitflop Flip Flops - Women Fitflop Flip Flops online on YOOX United Kingdom - 11549568FFBrian Atwood Court - Women Brian Atwood Courts online on YOOX United Kingdom - 11536531FXPrada Pink Velcro Ankle Strap Sandals , 7pTa9i2q BUGATTI 0001 SHOES FOR WOMENGreat choice Scarpa Neutron 2WOMENS Rachel Zoe Natural/Nude Finley Sandals New products in 2315woman Prada Black 3xz047 Wedges Practical and economicalLadies Isabel Marant White Sneakers Wedges Strong valueWOMENS Missoni Blac Platforms Economical and practical
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.