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.Armani Jeans Ankle Boot - Women Armani Jeans Ankle Boots online on YOOX United Kingdom - 11313256OL , Twin-Set Simona Barbieri Court - Women Twin-Set Simona Barbieri Courts online on YOOX United Kingdom - 11252152BGSOTOALTO Tomgel WEDGE-HEEL SANDALS FOR WOMEN , Christian Louboutin Black Taupe Gunmetal Galata 70 Patent Leather Pvc Clear Cutout Heels Sandals 37.5 Pumps , Nike Air Max 90 Eazy - Sneakers - Men Nike Sneakers online on YOOX United Kingdom - 11481682QPwomens Steve Madden Multicolor Arctic Sneakers a wide range of products , Ladies Express Black Strapy Wedges Suitable for color , womens Jimmy Choo Floral Kemble Sandals Fashion patternLadies RSVP Pink Rhinestones Sandals environmentally friendlyMen/Women ecco Trainers Moderate cost , men's/women's Pelle Moda Inna Heels Fine processingmen's/women's L.K. Bennett Kayla Boots New styleAndre CLOCHETTE - Slip-ons Colour: nudeFootJoy Contour FIT Cleated Plain Toeman/woman Anna Field Over-the-knee boots Preferred boutique , men's/women's VIONIC Miles Sneakers & Athletic VIONIC Great variety , Wedge heel loafers , yellow, La Redoute Collections , Anderson Boots - Men Anderson Boots online on YOOX United Kingdom - 11521595GS , Chuck taylor all star ox mono leather low top trainers , black, Conversemen's/women's Dr. Martens Mae Sneakers & Athletic Dr. Martens renewed on time , Kjøre Project Sneakers - Men Kjøre Project Sneakers online on YOOX United Kingdom - 11479284UQPierre Darré Sneakers - Men Pierre Darré Sneakers online on YOOX United Kingdom - 11429129HQ , Ras Sneakers - Women Ras Sneakers online on YOOX United Kingdom - 11511611BQ , A.Testoni Ankle Boot - Women A.Testoni Ankle Boots online on YOOX United Kingdom - 11548690XKLove Moschino Court - Women Love Moschino Courts online on YOOX United Kingdom - 11451107JGMarc Jacobs Sneakers - Women Marc Jacobs Sneakers online on YOOX United Kingdom - 11573800JO , High-quality Del Toro Intrecciato LoaferTempur-Pedic Therman Make comfort your companion the season with the Tempur-Pedic Therman moccasin style slipperG•Six Workshop Ankle Boot - Women G•Six Workshop Ankle Boots online on YOOX United Kingdom - 11294492DPAquazzura Beige Classic Wild Thing Suede 50mm City Euro 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.