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.Nr Rapisardi Ankle Boot - Women Nr Rapisardi Ankle Boots online on YOOX United Kingdom - 11503733WA , Pretty Ballerinas Ballet Flats - Women Pretty Ballerinas Ballet Flats online on YOOX United Kingdom - 11544690IH , Giampaolo Viozzi Sandals - Women Giampaolo Viozzi Sandals online on YOOX United Kingdom - 11360804UTFranco Colli Court - Women Franco Colli Courts online on YOOX United Kingdom - 11471739HJCdm Ankle Boot - Women Cdm Ankle Boots online on YOOX United Kingdom - 11504830BM , QslkmSqn men's/women's Alegria Martinique Sandals Characteristics , Chinese Laundry TAKE ME THERE Suede / blackSanders Finchley - Black Suede Tassel Loafer, Leather Sole - Loafers - Men Sanders Loafers online on YOOX United Kingdom - 11458097NP , Nike Air Max 1 Premium Sc - Sneakers - Men Nike Sneakers online on YOOX United Kingdom - 11442161QE , Dibrera By Paolo Zanoli Court - Women Dibrera By Paolo Zanoli Courts online on YOOX United Kingdom - 11568672TKwomen Tory Burch Red Thora Sandals High security , men's/women's Nine West Juliander Heels Excellent qualitymens/womens Fergalicious Tootsie Wide Calf Boots TRUE , Adidas Bronx High heeled ankle boots - tealPavement LOUISE - Classic ankle boots Colour: black , Legends Sneakers - Men Legends Sneakers online on YOOX United Kingdom - 11561023FTNike Performance MAMBA RAGE - Basketball shoes - electric green/black/green apple/volt/universal red , men/women New Balance Zante v2 Sneakers & Athletic New Balance Packaging diversity , Mi/Mai Loafers - Women Mi/Mai Loafers online on YOOX United Kingdom - 11505707VF , Martin Rey Boots - Women Martin Rey Boots online on YOOX United Kingdom - 11501892PV , Santoni Ankle Boot - Women Santoni Ankle Boots online on YOOX United Kingdom - 11543953QS , Pedro García Sandals - Women Pedro García Sandals online on YOOX United Kingdom - 11573780KVDaniele Tortora Loafers - Women Daniele Tortora Loafers online on YOOX United Kingdom - 11495269QENon-slip Alegria Seville Dream FitElegant and sturdy set meal Sam Edelman RashaWholesale trade Steve Madden Upswing , ladies Cole Haan Brown Nikeair Wedges Easylady adidas X Yeezy Grey/Orange Sneakers economywomen Tory Burch White/ Silver Sneakers quality , woman Silver Plage "Michelle" Sandals Different styles ,
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.