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.Byeuuns & Neul Loafers - Women Byeuuns & Neul Loafers online on YOOX United Kingdom - 11495185SQ , Ami Alexandre Mattiussi Sneakers - Men Ami Alexandre Mattiussi Sneakers online on YOOX United Kingdom - 11401637QB , Juli Pascal Paris Ankle Boot - Women Juli Pascal Paris Ankle Boots online on YOOX United Kingdom - 11546913XE , Asics Tiger Gel-Kayano Trainer Evo - Sneakers - Men Asics Tiger Sneakers online on YOOX United Kingdom - 11106509PQ , Miu Miu Logo Embossed Embellished Stretch Knit Neoprene Sneakers Sneakers , BRUNATE 31507 ZAPATO DE SALóN PARA MUJERCUMBIA 30328 Negro FASHION FOOTWEAR FOR WOMENDORKING D7256-dorking FASHION ANKLE BOOTS FOR WOMEN , woman Dolce&Gabbana Brown D&g Platforms High securityeS Skateboarding | eS Skateboarding Square Three sneaker in gray , mens/womens Steve Madden Tala Boots Quality and consumer firstASOS DESIGN | ASOS DESIGN Maxfield leather fringed loafers , Adidas Rapisardi TESS - Boots - blackZolfo Boots - Men Zolfo Boots online on YOOX United Kingdom - 11508196EX , Novesta Sneakers - Men Novesta Sneakers online on YOOX United Kingdom - 11375265TTMen/Women Badgley Mischka Sonya Heels Elegant and sturdy set mealOfficine Partenope Boots - Men Officine Partenope Boots online on YOOX United Kingdom - 11507604GR , Pantofola D'oro Sneakers - Men Pantofola D'oro Sneakers online on YOOX United Kingdom - 11455574HI , Miista Sandals - Women Miista Sandals online on YOOX United Kingdom - 11226163BWMjus Sandals - Women Mjus Sandals online on YOOX United Kingdom - 11419304FA , L'arianna Ballet Flats - Women L'arianna Ballet Flats online on YOOX United Kingdom - 11521339VE , Sergio Rossi Boots - Women Sergio Rossi Boots online on YOOX United Kingdom - 44814734RS , Patrizia Pepe Sandals - Women Patrizia Pepe Sandals online on YOOX United Kingdom - 11436059UK , Ruco Line Sneakers - Women Ruco Line Sneakers online on YOOX United Kingdom - 11334907RTSigerson Morrison Boots - Women Sigerson Morrison Boots online on YOOX United Kingdom - 11490358DG , Great choice Yosi Samra Vidi Mule , Roxy Bonny Complete your fall look with the wardrobe-defining Roxy Bonny boot!ladies adidas Mint Green Samba Sneakers Not so expensive , Eileen Fisher Black Leather Slingback Sneakers Sneakers , Women's Jimmy Choo Isabel Formal Shoes finishing
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.