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.Marc Ellis Ankle Boot - Women Marc Ellis Ankle Boots online on YOOX United Kingdom - 11472021NH , Rick Owens Ankle Boot - Women Rick Owens Ankle Boots online on YOOX United Kingdom - 11513791HGJanet & Janet Sandals - Women Janet & Janet Sandals online on YOOX United Kingdom - 11398850SX , Emanuela Passeri Ankle Boot - Women Emanuela Passeri Ankle Boots online on YOOX United Kingdom - 11444662UN , Le Marinē Court - Women Le Marinē Courts online on YOOX United Kingdom - 11485901FNJeffrey Campbell Sneakers - Women Jeffrey Campbell Sneakers online on YOOX United Kingdom - 11503196NM , FIARDI 1604 FASHION SANDALS FOR WOMEN , Steve Madden Spunky - Ankle Boot - Women Steve Madden Ankle Boots online on YOOX United Kingdom - 11567327GG , Nila & Nila Court - Women Nila & Nila Courts online on YOOX United Kingdom - 11476763MBPrada Black Metalic Silver and Grey Monte Carlo Fashion Sneakers SneakersMISS Keen Multicolor Slip On Sneakers Elegant and stable packagingWomen's Tory Burch Navy Chelsea Wedges Online sales , ladies Tory Burch Cream Wedges Different productslady Stuart Weitzman Black Stretchup Sandals StylishConverse Chuck Taylor All Star Shorelinemens/womens Marc Jacobs Olivia Strap Sandal Heels flagship storeAdidas Peter Kaiser BRIT - Boots - grey , mens/womens Steve Madden Belle Heels the most economicalAdidas Marco Tozzi Over-the-knee boots - black , Adidas Vero Moda VMKILA BOOT - Classic ankle boots - gibraltar sea , mens/womens Nine West Juanita Clogs & Mules Modern and stylish fashion , Calpierre Sneakers - Women Calpierre Sneakers online on YOOX United Kingdom - 11407602HAGarrice Sandals - Women Garrice Sandals online on YOOX United Kingdom - 11560309CN , Bikkembergs Sneakers - Women Bikkembergs Sneakers online on YOOX United Kingdom - 44999424TT , Nr Rapisardi Loafers - Women Nr Rapisardi Loafers online on YOOX United Kingdom - 11504821UECarlo Pazolini Sneakers - Women Carlo Pazolini Sneakers online on YOOX United Kingdom - 11407486IRSophia Webster Sandals - Women Sophia Webster Sandals online on YOOX United Kingdom - 11404532DFQIVUYCCY IGI AND CO 8894 , Wear resistant Gabor Gabor 51.270 , Year-end special promotions Sanuk Chiba Quest
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.