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.John Galliano Ankle Boot - Women John Galliano Ankle Boots online on YOOX United Kingdom - 11516607TXDkny Women's Pump - Court - Women Dkny Courts online on YOOX United Kingdom - 11414198AP , RS-0 SOUND Men's Sneakers | Puma White | PUMA RS-0 | PUMA United States , Givenchy White Urban Knot Logo Band Leather Sneakers 38 Sneakers , ladies Zara Strap Heel Sandals Modern and stylish fashion , SKECHERS Performance Go Walk Revolution Ultra Revolve , CALLAGHAN 89833 ZAPATO DE CU?A PARA MUJER , man/woman Reef Bliss Nights Sandals Primary quality , Men/Women Stacy Adams Rico Oxfords Reputation firstBj?rn Borg CELL - Trainers - dark grey , Homers SIENA - Ankle boots Colour: crosta tuscany , Fiorentini+Baker Boots - Men Fiorentini+Baker Boots online on YOOX United Kingdom - 11501092UAQuattrobarradodici Sneakers - Men Quattrobarradodici Sneakers online on YOOX United Kingdom - 11457064DWMoma Boots - Men Moma Boots online on YOOX United Kingdom - 11516556SD , Adidas E8 BY MIISTA TINDRA - Ankle boots - blackMen/Women New Balance Classics WS247v2 Sneakers & Athletic New Balance Classics online sale , Salomon Sneakers - Women Salomon Sneakers online on YOOX United Kingdom - 11399461FHBikkembergs Sneakers - Women Bikkembergs Sneakers online on YOOX United Kingdom - 11450607VPPiampiani Sandals - Women Piampiani Sandals online on YOOX United Kingdom - 11571296NBGioseppo Sneakers - Women Gioseppo Sneakers online on YOOX United Kingdom - 11575686LP , Moma Ankle Boot - Women Moma Ankle Boots online on YOOX United Kingdom - 11227369PV , Buttero® Ankle Boot - Women Buttero® Ankle Boots online on YOOX United Kingdom - 11544556ROSonia Rykiel Sandals - Women Sonia Rykiel Sandals online on YOOX United Kingdom - 11451846KKVagabond Shoemakers Sandals - Women Vagabond Shoemakers Sandals online on YOOX United Kingdom - 11479440GCLong-term reputation ASICS GEL-Scram 4 , Tretorn Eve Tretorn elevates your next look with the Eve sneaker , Naot Explorer The Explorer is part of the Naot Vibe Collection which runs as a Medium Width. , Jimmy Choo Nude Leather Kitten Heel Bow / Eu 39.5 Slides Sandals , women Steve Madden Gold Keesha Wedges Superior qualityWomen's Castañer Blue Espadrille Wedge Sandals Excellent
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.