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.Tabitha Simmons Ankle Boot - Women Tabitha Simmons Ankle Boots online on YOOX United Kingdom - 11524560OO , Saint Laurent Ankle Boot - Women Saint Laurent Ankle Boots online on YOOX United Kingdom - 11347010LM , The Seller Sandals - Women The Seller Sandals online on YOOX United Kingdom - 11408925SC , What For Boots - Women What For Boots online on YOOX United Kingdom - 11490699VO , Aigle MALOUINE BT Black / CamelCole Haan Navy Blue Leather Sneakers SneakersHomers DANY - Classic ankle boots Colour: crosta sirenaMen/Women Nina Rumina Heels Has a long reputationmens/womens Sam Edelman Hazel 4 Heels Charming designDiadora Sneakers - Men Diadora Sneakers online on YOOX United Kingdom - 11245933XJHogan Boots - Men Hogan Boots online on YOOX United Kingdom - 11476039LAman/woman Merrell Rant Discovery Moc Canvas Sneakers & Athletic Merrell professional design , mens/womens Dolce Vita Holli Flats Known for its beautiful quality , men/women Steve Madden Queue Boat Steve Madden Orders are welcome , Renzo Favero Loafers - Men Renzo Favero Loafers online on YOOX United Kingdom - 11544987SUCesare P. Sneakers - Men Cesare P. Sneakers online on YOOX United Kingdom - 11485032HJ , Mi/Mai Ankle Boot - Women Mi/Mai Ankle Boots online on YOOX United Kingdom - 11037671FPRefresh Ballet Flats - Women Refresh Ballet Flats online on YOOX United Kingdom - 11502484VFGianvito Rossi Court - Women Gianvito Rossi Courts online on YOOX United Kingdom - 11503711IX , Kenneth Cole Reaction Black Summer SandalsWHj8mfLv To Boot New York Fordhamproduct quality Sergio Rossi A81090 MFN341Onex Iced It is recommended that you order 1/2 to 1 full size larger than your usual size. , Matisse Berlin Strap into a work of art with the subtle lines of the Berlin from Matisse. , Giuseppe Zanotti White New London Somerset Perforated Leather High-top Logo Sneakers SneakersWOMEN Pedro Garcia Black Fiona Sandals At an affordable price , Tory Burch Navy Blue Powder Coated Melinda 45mm Sandals , New Balance White/Blue Ww558wb Walking Ladie's Sneakers Sneakers , woman Dolce&Gabbana Multicolor Poppy Wedge Sandals New designNike White/Black Free Tr 5.0 Flyknit Sneakers
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.