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.Vic Matiē Ankle Boot - Women Vic Matiē Ankle Boots online on YOOX United Kingdom - 11275915PG , Isabel Marant Ankle Boot - Women Isabel Marant Ankle Boots online on YOOX United Kingdom - 11061865SORuco Line Sneakers - Women Ruco Line Sneakers online on YOOX United Kingdom - 11222680WTManuela Dardozzi Sneakers - Women Manuela Dardozzi Sneakers online on YOOX United Kingdom - 11423455CWAlan Jurno Loafers - Women Alan Jurno Loafers online on YOOX United Kingdom - 11519110NJAvec Modération Sandals - Women Avec Modération Sandals online on YOOX United Kingdom - 11493931CD , APLAUSO 4411 ZAPATO CONFORT DE MUJERJambu Gray/Petal J-sport By "Mermaid" SneakersSteve Madden Bringit Heeled Sandal - Sandals - Women Steve Madden Sandals online on YOOX United Kingdom - 11546950UNLADY Tory Burch Silver Lowell Sandals in short supply , woman Mezlan Black Men’s Formal Shoes Hot saleladies Isabel Marant Black Lenny Sandals Many stylesSPROX 385870-b6600 Lilac FASHION SANDALS FOR WOMENAdidas Tommy Hilfiger FLEXIBLE - Ballet pumps - blueAdidas Sneakers - Men Adidas Sneakers online on YOOX United Kingdom - 11360583VX , Adidas Kennel + Schmenger MALU - Ballet pumps - schwarzCalvin Klein Swimwear INTENSE POWER FF SANDAL - Pool shoesmen's/women's Lucky Brand Kelbie 3 Boots Quality and consumer first , Alberto Guardiani Loafers - Men Alberto Guardiani Loafers online on YOOX United Kingdom - 11027213GOFilling Pieces Sneakers - Men Filling Pieces Sneakers online on YOOX United Kingdom - 11434974SOMen/Women Onitsuka Tiger by Asics Gel-Sight Sneakers & Athletic Onitsuka Tiger by Asics modern , Schutz Sandals - Women Schutz Sandals online on YOOX United Kingdom - 11529347WS , Aquarelle Sandals - Women Aquarelle Sandals online on YOOX United Kingdom - 11471922NIMarni Court - Women Marni Courts online on YOOX United Kingdom - 11439890PO , Geneve Ankle Boot - Women Geneve Ankle Boots online on YOOX United Kingdom - 11535774TC , Amiri Ankle Boot - Women Amiri Ankle Boots online on YOOX United Kingdom - 11583679HFAlberta Ferretti Sandals - Women Alberta Ferretti Sandals online on YOOX United Kingdom - 11417292MPHuman border Propet Madison Mid ZipHnsX80su Women's YEEZY V2 Sneakers impeccable , Tory Burch Ivory Batik Floral 112 Thandie Flip Flop Wedge Sandals ,
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.