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.Alberto Guardiani Ankle Boot - Women Alberto Guardiani Ankle Boots online on YOOX United Kingdom - 11255115NV , Four Five Ankle Boot - Women Four Five Ankle Boots online on YOOX United Kingdom - 11539065KO , Jeffrey Campbell Ankle Boot - Women Jeffrey Campbell Ankle Boots online on YOOX United Kingdom - 11322784IFCesare Paciotti 4Us Sneakers - Men Cesare Paciotti 4Us Sneakers online on YOOX United Kingdom - 11438604XMCALLAGHAN 87193 ZAPATO CONFORT DE MUJERCALLAGHAN 90000 FASHION FOOTWEAR FOR MENFendi Logo Embossed Leather Sneakers Sneakers , New Balance 996 Textile - Sneakers - Men New Balance Sneakers online on YOOX United Kingdom - 11333575PVWomen's Isabel Marant Cream Wedges Easy to clean surfacewoman Superga Gray Suede Sneakers Platforms Stylish and charmingLADY Vince Camuto Black Formal Shoes New design , STROVER 37663 ZAPATO DE FIESTA PARA MUJER , men's/women's J. Renee Valik Boots Wholesale trademen/women Tommy Hilfiger Damien Loafers Authentic guarantee , men/women Church's Pembrey Loafer Loafers Seasonal promotion , Right Bank Shoe Co? Indy Vachetta/Canvas Oxford , Men/Women Fergalicious Shimmer Sandals Consumer firstSol Sana BRUNO - Ankle boots Colour: black elephant , mens/womens Frances Valentine Mai Lifeguard Sandals stable qualityCasbia Sneakers - Men Casbia Sneakers online on YOOX United Kingdom - 11552766NT , Ylati Boots - Men Ylati Boots online on YOOX United Kingdom - 11479201JLAdidas Peter Kaiser Wide Fit WIDE FIT WETA - Classic heels - notte sarto , Cavallini Ankle Boot - Women Cavallini Ankle Boots online on YOOX United Kingdom - 11484079CA , Jessica Simpson Sandals - Women Jessica Simpson Sandals online on YOOX United Kingdom - 11488844VLAlegria Seville This style is perfect for those in the nursing, hospitality and other occupational fields because of its ability to provide unmatched comfort and support , Air Jordan White/ Varsity Red-black * Retro 11 Bg Nike SneakersJ.W.Anderson Kumquat Converse Chuck Taylor ‘70 Hi Toy SneakersManolo Blahnik Gold Leather Ankle Strap Kitten Heels SandalsWOMENS Manolo Blahnik Black Alligator Sandals Attractive and durablelady Giuseppe Zanotti Black High Sneakers Elegant shape ,
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.