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.Twin-Set Simona Barbieri Court - Women Twin-Set Simona Barbieri Courts online on YOOX United Kingdom - 11243117NQ , Ruco Line Sneakers - Women Ruco Line Sneakers online on YOOX United Kingdom - 11498922NW , Cult Ankle Boot - Women Cult Ankle Boots online on YOOX United Kingdom - 11007144QWMi/Mai Ankle Boot - Women Mi/Mai Ankle Boots online on YOOX United Kingdom - 11505749VW , Mi/Mai Ankle Boot - Women Mi/Mai Ankle Boots online on YOOX United Kingdom - 11506030TG , Wolverine Marauder Multishox? Waterproof Steel Toe , CAMPER K100374-camper CASUAL SHOES FOR MAN , NRGY Neko Engineer Knit Wns | Puma Black-Iron Gate-Orchid , Open Closed Shoes Loafers - Women Open Closed Shoes Loafers online on YOOX United Kingdom - 11331485OOwomen Tory Burch Parrot Pink Sandals Has a long reputationCalvin Klein Jeans ZAZAH - High-top trainers , Salomon SPEEDCROSS 4 - Trail running shoes , Men/Women Vince Camuto Kessina Heels Latest styles , H by Hudson ALCESTER - TrainersLeather sandals with asymmetric straps , black, La Redoute CollectionsClarks TRI NATIVE - Trainers - dark greySkechers Performance SERENE - Neutral running shoes Colour: mauve , man/woman Rocket Dog Reagle Sneakers & Athletic Rocket Dog Clearance saleHundred 100 Boots - Men Hundred 100 Boots online on YOOX United Kingdom - 11516508NGBruno Bordese Sandals - Men Bruno Bordese Sandals online on YOOX United Kingdom - 11428339IPmen/women Nike Zoom Winflo 2 Sneakers & Athletic Nike Guarantee quality and quantity , Tod's Sandals - Women Tod's Sandals online on YOOX United Kingdom - 11174425JSPertini Sneakers - Women Pertini Sneakers online on YOOX United Kingdom - 11458508SD , Pokemaoke Sandals - Women Pokemaoke Sandals online on YOOX United Kingdom - 11570565NS , Str/Ke Mvmnt Sneakers - Men Str/Ke Mvmnt Sneakers online on YOOX United Kingdom - 11269936KMQuality products Rachel Zoe Aubrey Sandalcheapest Taos Footwear Retro Star , Sufficient supply PUMA Clyde Big Sean , British temperament Levi's Shoes Carlsbad Denimadidas Blue/Orange Adidas(R) Run Neo V Jogger - Toddler 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.