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.Lacoste Sport Light - Sneakers - Women Lacoste Sport Sneakers online on YOOX United Kingdom - 11211041WOSergio Rossi Ankle Boot - Women Sergio Rossi Ankle Boots online on YOOX United Kingdom - 11526963JX , Lanciotti Dé Verzi Loafers - Men Lanciotti Dé Verzi Loafers online on YOOX United Kingdom - 11556101WQDurango Maverick 11" Ventilated Steel Toe , PUMA Spirit FG Firm Ground Men’s Soccer Cleats | Black-Yellow-Gray | PUMA Soccer Footwear | PUMA United States , Adidas Originals Zx Flux Adv Smooth - Sneakers - Women Adidas Originals Sneakers online on YOOX United Kingdom - 44997717DB , Palomitas By Paloma Barceló Sandals - Women Palomitas By Paloma Barceló Sandals online on YOOX United Kingdom - 11391877DV , O6 The Gold Edition Sandals - Women O6 The Gold Edition Sandals online on YOOX United Kingdom - 11463937HM , CALIFERS Botines Mujer Piel Lavie Colection Ja419q90-negro FASHION FOOTWEAR FOR WOMENJOHN SMITH Calea W Marino-fucsia LOW-TOP TRAINERS FOR WOMENwomen adidas Turbular Shadow Knit Sneakers Fine workmanshipHISPANITAS Hi-88017 FASHION ANKLE BOOTS FOR WOMEN , Peter Kaiser NOEMITA - Classic heels Colour: schwarz , men/women Jambu Viola Heels Exquisite (processing) processing , Unisa KACERA - Platform sandals Colour: nacar , Dirty Laundry Miss Jaxon Faux Fur Lined Mule Sneaker , mens/womens Eric Michael Tulip Heels Vintage tide shoesAmiri Sneakers - Men Amiri Sneakers online on YOOX United Kingdom - 11571199HNDiesel Sneakers - Men Diesel Sneakers online on YOOX United Kingdom - 11414683PBTod's Loafers - Men Tod's Loafers online on YOOX United Kingdom - 11568221EU , Tod's Loafers - Men Tod's Loafers online on YOOX United Kingdom - 11543994DXmens/womens Soludos Open-Toe Midwedge 70mm Heels Win the praise of customers , Bruno Bordese Sneakers - Men Bruno Bordese Sneakers online on YOOX United Kingdom - 11496756WAClocharme Sneakers - Women Clocharme Sneakers online on YOOX United Kingdom - 11461851FP , Pura López Sandals - Women Pura López Sandals online on YOOX United Kingdom - 11135434NN , Jimmy Choo Pink Satin (142420) Sandalswoman Stuart Weitzman Almond Tijuana Sandals Attractive and durableWomen's Prada Black & Gold Sandals Big clearance sale , women Christian Louboutin Lubricant Formal Shoes Exquisite workmanshipwomen Donald J. Pliner Silver Sandals Excellent craft
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.