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.Giancarlo Paoli Ankle Boot - Women Giancarlo Paoli Ankle Boots online on YOOX United Kingdom - 11477309KBL' Autre Chose Court - Women L' Autre Chose Courts online on YOOX United Kingdom - 11579562QR , Marc Ellis Ankle Boot - Women Marc Ellis Ankle Boots online on YOOX United Kingdom - 11533323XT , Anna F. Sandals - Women Anna F. Sandals online on YOOX United Kingdom - 11380230OQ , Manila Grace Sandals - Women Manila Grace Sandals online on YOOX United Kingdom - 11491552ICFiorangelo Ankle Boot - Women Fiorangelo Ankle Boots online on YOOX United Kingdom - 11448190DN , qUcwBY2a men's/women's LifeStride Quizzical Flats QueenslandWOMEN Calvin Klein Nude Ck Wedges Big clearance saleWomen's Report Signature Black Leyta Sandals Used in durability , Puma BASKET CLASSIC - Trainers From , Hogan Boots - Women Hogan Boots online on YOOX United Kingdom - 11283769XK , Celine Sandals - Women Celine Sandals online on YOOX United Kingdom - 11362876ND , Men/Women Totes Marley Boots Highly praised and appreciated by the consumer audiencemen's/women's Ryka Harmony SMT Sneakers & Athletic Ryka Popular tide shoesMaria Mare PAOLA - High heeled ankle boots Colour: lotus black , Converse CHUCK TAYLOR ALL STAR HI - High-top trainers Colour: blackAlberto Guardiani Loafers - Men Alberto Guardiani Loafers online on YOOX United Kingdom - 11578227NQTod's Loafers - Women Tod's Loafers online on YOOX United Kingdom - 11283545IASam Edelman Court - Women Sam Edelman Courts online on YOOX United Kingdom - 44925475EQ , Armani Collezioni Loafers - Women Armani Collezioni Loafers online on YOOX United Kingdom - 11524016GE , Stuart Weitzman Boots - Women Stuart Weitzman Boots online on YOOX United Kingdom - 11568186SXRuco Line Sneakers - Women Ruco Line Sneakers online on YOOX United Kingdom - 11382131XF , Cat Ankle Boot - Women Cat Ankle Boots online on YOOX United Kingdom - 44936124VJMiu Miu Court - Women Miu Miu Courts online on YOOX United Kingdom - 11536924POPrada Ballet Flats - Women Prada Ballet Flats online on YOOX United Kingdom - 11522402MBAxel Arigato Beige Clean 90 SneakersSimple Tommy Hilfiger Narcee 2 , Valuable boutique Pikolinos Salou M9J-4201Women's Air Jordan Flight Sneakers Clever and practical , women Burberry Purple Purpleheather 12402 Sandals Quality first
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.