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.Alberto Fermani Ankle Boot - Women Alberto Fermani Ankle Boots online on YOOX United Kingdom - 11535212HKPura López Ankle Boot - Women Pura López Ankle Boots online on YOOX United Kingdom - 11532249UKGIOSEPPO 43310 LOW-TOP TRAINERS FOR WOMENBasket Heart New School Women's Sneakers | CERULEAN-CERULEAN , Suede Classic Sneakers | Forest Night-Puma Team Gold | PUMA Suedes | PUMA United States , Roberto Del Carlo Ankle Boot - Women Roberto Del Carlo Ankle Boots online on YOOX United Kingdom - 11218101FCMISS Tory Burch Mini Miller Wedges shopping online , Rag & Bone Multicolor Reese Red Sandalsmen/women Eileen Fisher Nelson Boots Modern mode , mens/womens Gordon Rush Carson Boots high quality , Men/Women Pelle Moda Ilan Heels Characteristics , Salewa WILDFIRE - Hiking shoes , Y's by Yohji Yamamoto Thong Sandalmens/womens ASH Peace Sneakers & Athletic ASH Easy lifemens/womens VIONIC Fyn Sneakers & Athletic VIONIC Complete specificationsMen/Women RUSH by Gordon Rush Chase Loafers modern , Steve Madden BOLTED - Over-the-knee boots Colour: redHogan Sneakers - Men Hogan Sneakers online on YOOX United Kingdom - 11486075UF , Barracuda Loafers - Women Barracuda Loafers online on YOOX United Kingdom - 11154389CQMigliore Loafers - Women Migliore Loafers online on YOOX United Kingdom - 11556913HT , Chiara Ferragni Sneakers - Women Chiara Ferragni Sneakers online on YOOX United Kingdom - 11227160CKMoon Boot Boots - Women Moon Boot Boots online on YOOX United Kingdom - 44847770NKStuart Weitzman Court - Women Stuart Weitzman Courts online on YOOX United Kingdom - 11533371WWTatoosh Flip Flops - Women Tatoosh Flip Flops online on YOOX United Kingdom - 11526229BL , Doriamaria Flip Flops - Women Doriamaria Flip Flops online on YOOX United Kingdom - 11537321EXLaura Biagiotti Sandals - Women Laura Biagiotti Sandals online on YOOX United Kingdom - 44945167XPDivine Follie Sandals - Women Divine Follie Sandals online on YOOX United Kingdom - 11570546IE , Carrano Sandals - Court - Women Carrano Courts online on YOOX United Kingdom - 11456764MRBalenciaga Red New Hitop Suede Leather Sneakers Eu 43 Mens Sneakers , Dior Black Fusion Mesh with Pom Pom's Fashion Sneakers
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.