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.Sgn Giancarlo Paoli Loafers - Women Sgn Giancarlo Paoli Loafers online on YOOX United Kingdom - 11529750BS , Zanfrini Cantù Ankle Boot - Women Zanfrini Cantù Ankle Boots online on YOOX United Kingdom - 11518962UA , Carlo Pazolini Ballet Flats - Women Carlo Pazolini Ballet Flats online on YOOX United Kingdom - 11408000RD , Herman & Sons Boots - Men Herman & Sons Boots online on YOOX United Kingdom - 11453865AWBy A. Boots - Women By A. Boots online on YOOX United Kingdom - 11501440NEECCO Golf Biom Hybrid 3 GTX , lady Valentino Metallic Leather Sandals Negotiate , LADY Dolce Vita Floral Sandals tendermens/womens Under Armour UA Glyde ST Sneakers & Athletic Under Armour The first batch of customers' comprehensive specificationsTory Burch White Emerald Gemini Rope Wedge Flip Flop Sandals , Ladies Loeffler Randall Peony Vera Sandals clearance saleAVISPAS Pit Sam FLAT ESPADRILLES FOR WOMENladies Tory Burch Brown Cassia Sandals durability , Chinese Laundry Exclusive - Z-Happy Hour , men's/women's CARLOS by Carlos Santana Posy Heels Valuable boutique , mens/womens Summit by White Mountain Ariella Heels Reliable performance , man/woman ED Ellen DeGeneres Lolena Oxfords Complete specificationsAsfvlt Sneakers - Men Asfvlt Sneakers online on YOOX United Kingdom - 11160734MB , ASICS DYNAFLYTE 3 - Competition running shoes - race blue/whiteStrategia Sandals - Women Strategia Sandals online on YOOX United Kingdom - 11531434HKWomsh Sneakers - Women Womsh Sneakers online on YOOX United Kingdom - 11508672XS , Springa Ankle Boot - Women Springa Ankle Boots online on YOOX United Kingdom - 11456762ES , Bikkembergs Ankle Boot - Women Bikkembergs Ankle Boots online on YOOX United Kingdom - 11333306HU , Sigerson Morrison Court - Women Sigerson Morrison Courts online on YOOX United Kingdom - 11559838UG , Pierre Darré Boots - Women Pierre Darré Boots online on YOOX United Kingdom - 11538700HG , Salvatore Ferragamo Yellow and Wood Sandals , Stylish and charming L'Amour Des Pieds Taimah , Born Freyr The Freyr sandal by Born is the perfect recipe for keeping cool and stylish this summer! , Mezlan Teseo Slip your feet into supreme comfort and style with the Mezlan Teseo derby shoeFnB1bZbs MISS Prada Blac Wedges promotion
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.