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.Twin-Set Simona Barbieri Slippers - Women Twin-Set Simona Barbieri Slippers online on YOOX United Kingdom - 11530100ECPUMA x ATELIER NEW REGIME Court Platform Brace Sneakers | Puma Black-Scarlet Ibis | PUMA SHOP ALL | PUMA United StatesLADY Christian Louboutin Yellow Youtoo Platforms Call firstMARPEN Neo Rosa FASHION SLIPPERS FOR WOMENwomens Salvatore Ferragamo Black Oa3040055 Wedges Comfort , mens/womens Dansko Jenna Loafers The latest technology , Men/Women Shellys London Flora platform oxford Oxfords New productConverse | Converse One Star Suede Sneakers In Orangeman/woman Adrianna Papell Jewel Flats Orders are welcomeNostrasantissima Boots - Men Nostrasantissima Boots online on YOOX United Kingdom - 11460949XNArtios Loafers - Men Artios Loafers online on YOOX United Kingdom - 11550885CMadidas Performance TERREX AGRAVIC GTX - Hiking shoes - basic green/shock yellow , men/women Durango Crush 14" Belted Collar Boots a wide variety of goods , River Island | River Island Wide Fit espadrille wedge heels in nude , Fratelli Rossetti Loafers - Men Fratelli Rossetti Loafers online on YOOX United Kingdom - 11556746SL , Bikkembergs Sneakers - Women Bikkembergs Sneakers online on YOOX United Kingdom - 11333737DD , Morobē Court - Women Morobē Courts online on YOOX United Kingdom - 11474374CK2Star Sneakers - Women 2Star Sneakers online on YOOX United Kingdom - 11548652WEEssentiel Antwerp Sandals - Women Essentiel Antwerp Sandals online on YOOX United Kingdom - 11468493CU , Manuel Barceló Sneakers - Women Manuel Barceló Sneakers online on YOOX United Kingdom - 11534862KJVivienne Westwood Sneakers - Women Vivienne Westwood Sneakers online on YOOX United Kingdom - 11517388EUAlessia Guidi Court - Women Alessia Guidi Courts online on YOOX United Kingdom - 11464509NV , Proenza Schouler Sandals - Women Proenza Schouler Sandals online on YOOX United Kingdom - 11155740RT , Maison Margiela Sneakers - Women Maison Margiela Sneakers online on YOOX United Kingdom - 11439846FX , Customer first FLY LONDON YUKE663FLYladies Bally Brown Leather Heels Sandals First in his classManolo Blahnik Black Suede with Suede Flower PumpsWOMEN Calvin Klein Na Formal Shoes Cheap orderlady Fendi White By3070-neh Sandals Practical and economicalGivenchy Multi-color Floral Leather Sneakers (100940) Sneakers
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.