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.Jeffrey Campbell Ankle Boot - Women Jeffrey Campbell Ankle Boots online on YOOX United Kingdom - 11466979UCNike Performance MERCURIAL VAPOR 12 ACADEMY NJR MG - Moulded stud football boots - amarillo/white/blackMarian Ankle Boot - Women Marian Ankle Boots online on YOOX United Kingdom - 11511771WQNike Air Max 95 Og - Sneakers - Men Nike Sneakers online on YOOX United Kingdom - 11549462PB , womens Chloé Espadrilles Sandals Won highly esteemed and widely trusted at home and abroad , MISS Stuart Weitzman Black Oxford Platforms Different stylesFLUCHOS F-0265 FASHION ANKLE BOOTS FOR WOMEN , Boxfresh SPARKO - Trainers - blue , L37 DREAM BOOTS - Boots Colour: blackGeox KAULA - Trainers Colour: blackMen/Women Pretty Ballerinas Slip-ons Sales online store , men/women Citilane clogs , purple/white, Crocs Shoes TRUEmens/womens LifeStride Imagine Loafers At an affordable pricemen's/women's Sperry Bermuda 3-Eye Boat Sperry Popular recommendationPrimabase Sneakers - Men Primabase Sneakers online on YOOX United Kingdom - 11473942QNAngel Loafers - Men Angel Loafers online on YOOX United Kingdom - 11545631LBPuma HYBRID ROCKET NETFIT - Neutral running shoes - puma black/iron gate , Adidas Evans CIRCLE BUCKLE DETAIL LONG BOOT - Boots - black , Jimmy Choo Sneakers - Men Jimmy Choo Sneakers online on YOOX United Kingdom - 11523097UNSchutz Sandals - Women Schutz Sandals online on YOOX United Kingdom - 11529347WS , Guess Sandals - Women Guess Sandals online on YOOX United Kingdom - 11410093LB , Moschino Sandals - Women Moschino Sandals online on YOOX United Kingdom - 11485705SO , Clocharme Ankle Boot - Women Clocharme Ankle Boots online on YOOX United Kingdom - 11556476VA , Andrea Catini Sandals - Women Andrea Catini Sandals online on YOOX United Kingdom - 11445000HDNaot Simiyu The Simiyu is from the Naot Serengeti Collection, which runs as a Medium width.Ladies Brown Rivol Cork #ma0181 Platforms Let our products go out into the worldTory Burch Black New Box Slip On Logo Leather Mules Espadrilles Wedge Sandals , Valentino White Rockstud Camo Star Camo Slip On Trainer Sneaker Flat Sneakers , lady Tory Burch Pink/Orange Miller Sandals From the latest modelTalbots Navy Blue Glossy Leather Nwob Shoes/Designer Sandals
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.