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.Nike Performance PHANTOM OBRAX 3 CLUB DF IC - Indoor football boots - wolf grey/black/light crimson , Cantarelli Ballet Flats - Women Cantarelli Ballet Flats online on YOOX United Kingdom - 11516415BIPUMA x ADER ERROR RS-100 Sneakers | Whisper White-Lapis Blue | PUMA PUMA X ADER ERROR | PUMA United States , Puma X Naturel Clydegraphic - Sneakers - Men Puma X Naturel Sneakers online on YOOX United Kingdom - 11385546GIMISS Tory Burch White/Gold Toggle Sandals High quality and economyAURA FUTURE 40301 P ZAPATO DE SALóN PARA MUJERFila DISRUPTOR - Trainers - white , Gravati Double Monk w/ Apron Toemen/women PUMA Incite FS Sneakers & Athletic PUMA comfortability , Kat Maconie DORIS - Classic ankle boots Colour: black/goldmen's/women's Frye Joel Chukka Boots Used in durability , Bikkembergs Sneakers - Men Bikkembergs Sneakers online on YOOX United Kingdom - 11521956DM , Lanvin Sneakers - Men Lanvin Sneakers online on YOOX United Kingdom - 11501442EPDsquared2 Sneakers - Men Dsquared2 Sneakers online on YOOX United Kingdom - 11554372BP , mens/womens Tretorn Nylite Knit Sneakers & Athletic Tretorn New marketCole Haan Loafers - Men Cole Haan Loafers online on YOOX United Kingdom - 11583920IOLeonardo Principi Loafers - Men Leonardo Principi Loafers online on YOOX United Kingdom - 11495331TABruno Magli Loafers - Men Bruno Magli Loafers online on YOOX United Kingdom - 11499928CB , Men/Women New Balance Classics CRT300v1 Sneakers & Athletic New Balance Classics Different goods , Nike Sneakers - Women Nike Sneakers online on YOOX United Kingdom - 11357757KEGiulia Taddeucci Sandals - Women Giulia Taddeucci Sandals online on YOOX United Kingdom - 11501647BT , Ghōud Venice Sneakers - Women Ghōud Venice Sneakers online on YOOX United Kingdom - 11548870IS , Giulia Taddeucci Sandals - Women Giulia Taddeucci Sandals online on YOOX United Kingdom - 11547144PXSergio Rossi Court - Women Sergio Rossi Courts online on YOOX United Kingdom - 11525883MLVic Matiē Sandals - Women Vic Matiē Sandals online on YOOX United Kingdom - 11118788HIArezzo Ankle Boot - Women Arezzo Ankle Boots online on YOOX United Kingdom - 11576655SN , Burberry White Leather Strap with Straw Wedge Slip-on Sandals , WOMEN Giuseppe Zanotti Black Stilettos Platforms Attractive fashionwomen Christian Louboutin Beige Sandals Carefully selected materials , WOMENS Burberry Beige Espadrilles Sandals Excellent features
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.