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.Dolce & Gabbana Sandals - Women Dolce & Gabbana Sandals online on YOOX United Kingdom - 11359123RM , Patrizia Pepe Espadrilles - Women Patrizia Pepe Espadrilles online on YOOX United Kingdom - 11196905GXNo Limits Sneakers - Women No Limits Sneakers online on YOOX United Kingdom - 11361064RPManufacture D'essai Sandals - Women Manufacture D'essai Sandals online on YOOX United Kingdom - 11437321FM , ZgPIZ2Gu men's/women's Bandolino Faleria Flats durability , Leo Studio Design Criss Cross Sling Sandal - Sandals - Women Leo Studio Design Sandals online on YOOX United Kingdom - 11467219JV , Open Closed Shoes Ankle Boot - Women Open Closed Shoes Ankle Boots online on YOOX United Kingdom - 11331481OVLADY Tory Burch Flowery Print Sandals special discount priceWOMEN Caparros Black Shimmer Formal Shoes Reasonable price , WOMENS Sam Edelman Slate Gray Platforms New designWOMEN Givenchy Black and White Sneakers Cheap , LADY Loeffler Randall Tan/Silver/Green Sandals Online sales , men/women LifeStride Parigi Heels main categoryDorothy Perkins LATTE - Slip-onsmens/womens PUMA Fierce VR Sneakers & Athletic PUMA modernMen/Women Dr. Martens Rigal 8-Eye Boot Boots Current shape , Calvin Klein Jeans MARVIN - Trainers - rosso/blue/grey/white , DC Shoes NET SE - Skate shoes FromColmar Sneakers - Men Colmar Sneakers online on YOOX United Kingdom - 11435087SG , Kenzo Sneakers - Men Kenzo Sneakers online on YOOX United Kingdom - 11337967RX , Converse CHUCK TAYLOR ALL STAR HI - High-top trainers Colour: black/brown , Men/Women Mustang High-top trainers Colour: bordeaux Attractive and durableEnval Soft Sneakers - Men Enval Soft Sneakers online on YOOX United Kingdom - 11464355MQNike Sneakers - Women Nike Sneakers online on YOOX United Kingdom - 11408611QB , Diemme Ankle Boot - Women Diemme Ankle Boots online on YOOX United Kingdom - 11500915NN , Charlotte Olympia Sandals - Women Charlotte Olympia Sandals online on YOOX United Kingdom - 11491797QSFwW3wGEn Kenneth Cole Reaction Wind Ankleexcellent quality Dr. Scholl's Work Inhale , Giuseppe Zanotti Black Shearling Lined Leather High Top Sneakerslady Brooks Brothers Tan Spectator Sandals Modern design
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.