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.Atp Atelier Ankle Boot - Women Atp Atelier Ankle Boots online on YOOX United Kingdom - 11496311CS , Karen Millen Ankle Boot - Women Karen Millen Ankle Boots online on YOOX United Kingdom - 11325662QXKeep Originals Sneakers - Women Keep Originals Sneakers online on YOOX United Kingdom - 11294939QW , 18 Kt Court - Women 18 Kt Courts online on YOOX United Kingdom - 11028557KLAlexander Smith Sneakers - Women Alexander Smith Sneakers online on YOOX United Kingdom - 11480929QBCALLAGHAN 90600.2 CASUAL SHOES FOR MANfNSdPlDz mens/womens Aravon Delilah Oxfords Export , Nike Free Tr 7 Metallic - Sneakers - Women Nike Sneakers online on YOOX United Kingdom - 11383031PALa Corde Blanche Ankle Boot - Women La Corde Blanche Ankle Boots online on YOOX United Kingdom - 11008495KQ , Apl® Athletic Propulsion Labs Sneakers - Women Apl® Athletic Propulsion Labs Sneakers online on YOOX United Kingdom - 11558493AOManila Grace Denim Ankle Boot - Women Manila Grace Denim Ankle Boots online on YOOX United Kingdom - 11042074GSAllbirds Kotare Birch New No Box Limited Edition Wool Sneakers Sneakers , Prada Creme & Beige & Brown Retro Quirky Squiggly Heels Sandalsman/woman Not Rated She Sandals Shopping promotionSimple WINGMAN - Trainers - navy , Men/Women Ariat Broadway Boots professional design , Men/Women Schutz Rashne Heels Adequate supply and timely delivery , mens/womens Kenneth Cole New York Joanne Sandals Superb craftsmanship , men's/women's Cole Haan Zerogrand Knit Ballet Flats Excellent function , Tommy Hilfiger PEARLIZED - Ballet pumps Colour: greymen/women Sigerson Morrison Rhoda 3 Heels The first batch of customers' comprehensive specifications"Intentionally_______." Sandals - Women "Intentionally_______." Sandals online on YOOX United Kingdom - 11506086VW , Allison Sandals - Women Allison Sandals online on YOOX United Kingdom - 11519000RWPollini Sandals - Women Pollini Sandals online on YOOX United Kingdom - 11331360HWAdidas Originals Sneakers - Women Adidas Originals Sneakers online on YOOX United Kingdom - 11335504DEManuel Barceló Loafers - Women Manuel Barceló Loafers online on YOOX United Kingdom - 11215011MQModern technology Badgley Mischka HampdenSufficient supply OluKai Hamakua Poko , Alexander Wang Rose Gold Bronze Lou Metallic Sandals , lady Silver/Yellow Annasea Wedges Elegant and robust packaging ,
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.