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.Clarks Originals Ankle Boot - Women Clarks Originals Ankle Boots online on YOOX United Kingdom - 11536404MDGiuseppe Zanotti Ankle Boot - Women Giuseppe Zanotti Ankle Boots online on YOOX United Kingdom - 11446085FQChiara Ferragni Open-Toe Mules - Women Chiara Ferragni Open-Toe Mules online on YOOX United Kingdom - 11494628DH , Alberto Guardiani Sneakers - Women Alberto Guardiani Sneakers online on YOOX United Kingdom - 11520761QW , Donna Soft Loafers - Women Donna Soft Loafers online on YOOX United Kingdom - 11533626WX , PLUMERS 9149 FASHION BOOTS FOR WOMENSee by Chloé Black Open Toe Leather Sb24180 SandalsLadies Nike Black/Pink Revolution 3 Sneakers quality Queen , PITILLOS 1214 ZAPATO DE CU?A PARA MUJER , Pull&Bear | Pull&Bear Cutout Multi Buckle BootBogs CRANDALL TALL - WelliesUa sk8-hi platform 2.0 platform trainers , black, Vans , New Look RONALD - High heeled sandals Colour: blackmen/women Teva Arrabelle Slide Leather Heels Preferred material , Hunter | Hunter original chelsea boots in navy , Vans Sneakers - Men Vans Sneakers online on YOOX United Kingdom - 11267784JGDsquared2 Sneakers - Men Dsquared2 Sneakers online on YOOX United Kingdom - 11298698XE , adidas Performance NEMEZIZ 18.4 FXG - Moulded stud football boots - zest/cblack/solred , New Look Wide Fit WIDE FIT ARETHA - High heeled ankle boots , Schutz Court - Women Schutz Courts online on YOOX United Kingdom - 44984835SX , Joseph Boots - Women Joseph Boots online on YOOX United Kingdom - 11481071PF , Paul Andrew Court - Women Paul Andrew Courts online on YOOX United Kingdom - 11552721AS , Sergio Rossi Court - Women Sergio Rossi Courts online on YOOX United Kingdom - 11525861GEGiuseppe Zanotti Sneakers - Women Giuseppe Zanotti Sneakers online on YOOX United Kingdom - 11495698RMsQst9SOw XTI 53827 C NegroLow price Bloch Broadway LoNike Blue Flyknit & Rainbow Be True Vapormax Sneakers with Box Sneakers , Tan Suede Leather Braided Slip On Cushioned SandalsLADY Hermès Orange Driving Sneaker Sneakers Exquisite workmanshipWomen's Burberry White Slingback Heels Platforms Elegant
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.