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.Studio Pollini Ankle Boot - Women Studio Pollini Ankle Boots online on YOOX United Kingdom - 11517726BPArmani Jeans Ballet Flats - Women Armani Jeans Ballet Flats online on YOOX United Kingdom - 11170312LCCatarina Martins Ankle Boot - Women Catarina Martins Ankle Boots online on YOOX United Kingdom - 11396078WRFrau Ankle Boot - Women Frau Ankle Boots online on YOOX United Kingdom - 11480732PP , Stacy Adams Dickinson Cap Toe Oxford , GBBRAVO 11821 ZAPATO PLANO PARA MUJERWOMENS Valentino Blush/Black Wedges Crazy priceVans Ua Authentic - Kendra Dandy - Sneakers - Women Vans Sneakers online on YOOX United Kingdom - 11238821UI , Dolce & Gabbana Ankle Boot - Women Dolce & Gabbana Ankle Boots online on YOOX United Kingdom - 11220433OWLADY Saint Laurent Orange Tribute Platforms Modern and elegant fashion , KAPPA 303xz20 Merfyn 902 Brown BOTíN PLANO DE MUJERPOLIN ET MOI 111870 FASHION FOOTWEAR FOR WOMENwoman Athena Alexander Roxi Wedges Diverse new design , lady Tod's Brown Mule Sandals Bright colors , Supra VAIDER CLASSIC - High-top trainers Colour: black/red , Emporio Armani | Emporio Armani logo runners in black , Adidas New Balance MS247 - Trainers - greyPuma CLASSIC - Trainers - ash/white , Birkenstock FLORIDA - Mules Colour: graceful gemm redAdidas Nike Performance FLEX TRAINER 8 - Sports shoes - black/white/anthracite , Men/Women Dolce Vita Tavina Sneakers & Athletic Dolce Vita Pleasant appearance , Henry Beguelin Sandals - Women Henry Beguelin Sandals online on YOOX United Kingdom - 11508512IO , Giuseppe Zanotti Sandals - Women Giuseppe Zanotti Sandals online on YOOX United Kingdom - 11185222IUStuart Weitzman Sandals - Women Stuart Weitzman Sandals online on YOOX United Kingdom - 11493059QA , John Richmond Loafers - Men John Richmond Loafers online on YOOX United Kingdom - 11060807OKBrown Vintage 80's Steampunk Goth Boots/Booties , Durable service Scott Hawaii Pala'ole , WOMEN Céline Black Leather Espadrille Wedges Very good quality , woman Saint Laurent Black 457733c20001000 Platforms Big sale , women Sophia Webster Blue Sandals Hot sale ,
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.