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.Police 883 Ankle Boot - Women Police 883 Ankle Boots online on YOOX United Kingdom - 11477156VM , Jeffery-West Sylvian Chimera Embroidered Zip Boot , Suede Heart Plaid Women's Sneakers | Gray Violet-Metallic Beige , Kendall + Kylie Kkcolt - Ankle Boot - Women Kendall + Kylie Ankle Boots online on YOOX United Kingdom - 11557524SN , Adidas Originals Stan Smith - Sneakers - Men Adidas Originals Sneakers online on YOOX United Kingdom - 11084858VX , PANAMA JACK Arles B35 Velour Marron FASHION FOOTWEAR FOR WOMEN , Ladies Zara Crystal Platforms Strong heat and heat resistanceWomen's Prada White Vernice Formal Shoes Order welcomeCole Haan Blue and Silver Beaded Sandals , Dirty Laundry DL Speak To Me D'orsay Flatmen's/women's Kork-Ease Baja Sport Heels Louis, elaborate , Adidas KIOMI Ankle boots - cognac/bronzemen/women Walking Cradles Micah Heels Non-slipMatisse Coconuts by Matisse - Decoman/woman Steve Madden Pipa Heels Various types and styles , mens/womens PUMA Fierce VR Sneakers & Athletic PUMA modernNike Sneakers - Men Nike Sneakers online on YOOX United Kingdom - 11572756KALost Ink Wide Fit WIDE FIT AMILY COURT - High heelsmen/women Lugz Colony CC Sneakers & Athletic Lugz Rich on-time deliveryAdidas Yosi Samra SAMARA - Foldable ballet pumps - black , Cult Sandals - Women Cult Sandals online on YOOX United Kingdom - 11500213DKPrimabase Sneakers - Women Primabase Sneakers online on YOOX United Kingdom - 11452191ND , Cafènoir Sneakers - Women Cafènoir Sneakers online on YOOX United Kingdom - 11376511JL , Blugirl Blumarine Loafers - Women Blugirl Blumarine Loafers online on YOOX United Kingdom - 11504214MOStuart Weitzman Sandals - Women Stuart Weitzman Sandals online on YOOX United Kingdom - 11569869FL , Panella Flip Flops - Women Panella Flip Flops online on YOOX United Kingdom - 11474141XNSuecomma Bonnie Sandals - Women Suecomma Bonnie Sandals online on YOOX United Kingdom - 11425693RX , ALDO Abiradia-R Wear the Abiradia-R sneaker any day of the week for an effortlessly stylish lookWOMENS Tory Burch Kara Wedges Big saleWomen's Stuart Weitzman I1474528 Platforms New design
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.