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.Vdp Collection Sneakers - Women Vdp Collection Sneakers online on YOOX United Kingdom - 11050161ARJohn Galliano Sneakers - Women John Galliano Sneakers online on YOOX United Kingdom - 11426435VRHISPANITAS Hv74941-hispanitas WEDGE-HEEL SANDALS FOR WOMENSKECHERS 14615 BOTíN PLANO DE MUJERMISS Alexander Wang Nude Sandals Queensland , Golden Goose Deluxe Brand Boots - Men Golden Goose Deluxe Brand Boots online on YOOX United Kingdom - 11235431LLAdidas Vagabond FRANCES - Slip-ons - dark blueLes Tropéziennes par M Belarbi BACKY - Sandals , man/woman Badgley Mischka Wade Clogs & Mules AffordableMen/Women Frye William Monk Chukka Boots Latest styles , Moschino Sneakers - Men Moschino Sneakers online on YOOX United Kingdom - 11492355VQmens/womens Crocs CitiLane Slip-On Sneaker Sneakers & Athletic Crocs Reputation firstASOS DESIGN | ASOS DESIGN sneakers in black with chunky soleGiorgio Brato Boots - Men Giorgio Brato Boots online on YOOX United Kingdom - 11461968ATIntropia Court - Women Intropia Courts online on YOOX United Kingdom - 11543034RGStrategia Ankle Boot - Women Strategia Ankle Boots online on YOOX United Kingdom - 11494421TSBruno Premi Court - Women Bruno Premi Courts online on YOOX United Kingdom - 11560594HGChiara Ferragni Loafers - Women Chiara Ferragni Loafers online on YOOX United Kingdom - 11549002AD , Elisabetta Franchi Court - Women Elisabetta Franchi Courts online on YOOX United Kingdom - 11244210KSChocolà Ankle Boot - Women Chocolà Ankle Boots online on YOOX United Kingdom - 11526230AQGrenson Clara - Loafers - Women Grenson Loafers online on YOOX United Kingdom - 11252604NA , Charlotte Olympia Sneakers - Women Charlotte Olympia Sneakers online on YOOX United Kingdom - 11482393OT , Giuseppe Zanotti Court - Women Giuseppe Zanotti Courts online on YOOX United Kingdom - 11395044EIwoman Dior Orange Formal Shoes Nice , J7Sz6u7H Saucony Progrid™ Integrity ST 2NBsTskM5 L'Artiste by Spring Step Minna0WccipuK SKECHERS 31363 TRAINERS FOR WOMEN , The highest quality material Hunter Luxury Shearling InsolesArche Bardoo Rich fashions to keep your feet comfortable. , Tod's Black Leather Fringe Loafer Pumps 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.