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.What For Ankle Boot - Women What For Ankle Boots online on YOOX United Kingdom - 11269738EB , F.Lli Bruglia Ankle Boot - Women F.Lli Bruglia Ankle Boots online on YOOX United Kingdom - 11518548OWChiara Ferragni Ankle Boot - Women Chiara Ferragni Ankle Boots online on YOOX United Kingdom - 11548594EBTosca Blu Shoes Sandals - Women Tosca Blu Shoes Sandals online on YOOX United Kingdom - 11118041SV , Isabel Marant Étoile Boots - Women Isabel Marant Étoile Boots online on YOOX United Kingdom - 11214774MHPaola D'arcano Court - Women Paola D'arcano Courts online on YOOX United Kingdom - 11463512VQ , Ruco Line Sneakers - Women Ruco Line Sneakers online on YOOX United Kingdom - 11495550SDMaria Cristina Sandals - Women Maria Cristina Sandals online on YOOX United Kingdom - 11514053PEPACO HERRERO 6593 SHOES FOR WOMEN , FitFlop GLITTERBALL TOE-POST Midnight / NavyOvye' By Cristina Lucchi Sandals - Women Ovye' By Cristina Lucchi Sandals online on YOOX United Kingdom - 11565092RN , LADY Vince Camuto White Tessem Sandals Win the praise of customersLONGEVIDA Bailarinas Mujer Piel Claireja507c80-negro FASHION FOOTWEAR FOR WOMEN , LADY Stuart Weitzman Brown Suede Wedges Rich on-time deliverySTROVER S013-a ZAPATO DE SALóN PARA MUJER , Casta?er BRIANDA - Platform sandals Colour: verdeman/woman RAYE Finley Heels New designmen's/women's David Tate Siren Oxfords Easy to clean surfaceAdidas ALDO WIEMA - Ankle boots - white , Kennel + Schmenger MILEY - High heels Colour: schwarz , MAI PIù SENZA MAMUT - High heeled sandals , Creative Recreation LEGATO - Trainers - pistachioJohn Galliano Sneakers - Men John Galliano Sneakers online on YOOX United Kingdom - 11521045NLFiorina Sandals - Women Fiorina Sandals online on YOOX United Kingdom - 11129341MPCalpierre Ankle Boot - Women Calpierre Ankle Boots online on YOOX United Kingdom - 11552092EC , Camper Edy - Sandals - Women Camper Sandals online on YOOX United Kingdom - 11436181TPDy5VT60N Havaianas Slim Royal Flip FlopsNike * Air Jordan 1 Pinnacle Snake Skin 24k Gold Plated Sneakers , Valentino Green Rockstud Camouflage Canvas High Top Sneaker Boots Sneakers , Women's Copper/Bronze Copper/Bronze Strapy Platform Sandals Aesthetic appearance
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.