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.Divine Follie Ankle Boot - Women Divine Follie Ankle Boots online on YOOX United Kingdom - 11224123SG , Fiorangelo Ballet Flats - Women Fiorangelo Ballet Flats online on YOOX United Kingdom - 11123169HX , Spaziomoda Ankle Boot - Women Spaziomoda Ankle Boots online on YOOX United Kingdom - 11449173GF , Norma J.Baker Sandals - Women Norma J.Baker Sandals online on YOOX United Kingdom - 11460860GOMaria Cristina Boots - Women Maria Cristina Boots online on YOOX United Kingdom - 11529361MK , Ladies Valentino Metallic Gold Platforms Newlkm0L2zX men/women ALDO Frilawia Boots serviceRS-0 Optic Sneakers | PumaSilver-Quarry-PumaWhite | PUMA RS-0 | PUMA United States , Dibrera By Paolo Zanoli Ankle Boot - Women Dibrera By Paolo Zanoli Ankle Boots online on YOOX United Kingdom - 11446973NFMoon Boot Vinile Met. - Boots - Women Moon Boot Boots online on YOOX United Kingdom - 11333106SQ , Adidas Originals Deerupt W - Sneakers - Women Adidas Originals Sneakers online on YOOX United Kingdom - 11540385NG , Vans Classic Slip-On X A Tribe Called Quest Collab.RIVIERABONUCCI Salones Mujer Piel Ja5124v24-rojo SHOES FOR WOMEN , Women's adidas White Nmd Rose Sneakers Nice appearance , men's/women's Steve Madden Doyle Boots Selected materials , Office | Office Hilda Suede Pointed Pumps , man/woman Joie Lakia Boots Perfect processingK-Swiss | K-Swiss ST529 heritage chunky sole sneakers in blackCtas hi stone wash trainers , grey, ConverseAdidas ALDO AFERINNA - Slip-ons - blackAdidas mint&berry High heeled boots - brownBelsire Loafers - Men Belsire Loafers online on YOOX United Kingdom - 11336630SImen/women Athena Alexander Jazzy Sandal Heels for you to choose , adidas Performance PREDATOR TANGO 18.4 IN - Indoor football boots - clear orange/core black , Fornarina Sneakers - Women Fornarina Sneakers online on YOOX United Kingdom - 11330112UR , Mally Ankle Boot - Women Mally Ankle Boots online on YOOX United Kingdom - 11476346GW , Tahari Venus Yeah, baby - you've got it! Show it off with the Tahari Venus flatJimmy Choo Nude Ribbon Bow Patent Leather SandalsLadies L.A.M.B. Lamb Formal Shoes in short supplywomen Prada Silver Sport Fuschia Sandals Strong value
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.