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.Islo Isabella Lorusso Court - Women Islo Isabella Lorusso Courts online on YOOX United Kingdom - 44860875CS , Acne Studios Ankle Boot - Women Acne Studios Ankle Boots online on YOOX United Kingdom - 11471187AX , See By Chloé Ankle Boot - Women See By Chloé Ankle Boots online on YOOX United Kingdom - 11581633SI , New Balance 574 Shattered Pearl - Sneakers - Women New Balance Sneakers online on YOOX United Kingdom - 11369700KHKendall + Kylie Ankle Boot - Women Kendall + Kylie Ankle Boots online on YOOX United Kingdom - 11448183AQRIVIERABONUCCI Cu?as Mujer Piel Ja3056r86-plateado WEDGE-HEEL SANDALS FOR WOMEN , WOMENS Giuseppe Zanotti Rose Gold Sandals Popular tide shoes , WOMENS Valentino Pink Leather Rockstud Pumps Stable quality , Levi's? TRACK - Ankle boots Colour: regular blackFaith OMBRE - High heels Colour: multicolorVans DIAMO - Trainers - pureed pumpkin/true white , Prada Loafers - Women Prada Loafers online on YOOX United Kingdom - 11510761LS3:10 Sneakers - Men 3:10 Sneakers online on YOOX United Kingdom - 11556065VKman/woman Lottusse Slip-ons - schwarz Shoes a wide range of productsRodo Sneakers - Women Rodo Sneakers online on YOOX United Kingdom - 11498971JN , Magrit Court - Women Magrit Courts online on YOOX United Kingdom - 11504480XU , Missoni Sandals - Women Missoni Sandals online on YOOX United Kingdom - 11553346DQ , Giorgio Fabiani Court - Women Giorgio Fabiani Courts online on YOOX United Kingdom - 11478334RP , Salvatore Ferragamo Court - Women Salvatore Ferragamo Courts online on YOOX United Kingdom - 11547285LE , Axel Arigato Sneakers - Women Axel Arigato Sneakers online on YOOX United Kingdom - 11562739ML , Bryan Blake Boots - Women Bryan Blake Boots online on YOOX United Kingdom - 11495501NQJXSsgnMB SKECHERS 12753-skechers TRAINERS FOR WOMENOfficial website Scarpa Moraine GTX® Ladyprofessional design Toni Pons Ona-AVWear resistant Original Penguin DevinNike Blue and Purple Air Zoom Vomero 10 SneakersManolo Blahnik Gold Leather Kitten Heel 39) 482611 Sandals , WOMEN Dior Red Allegria Formal Shoes Comfortable touch , Christian Louboutin Brown Satrinxa Espadrille (136992) SandalsMISS Fendi Burgundy Leather Platform Sandals brand ,
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.