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.Sandro Ramadori® Ankle Boot - Women Sandro Ramadori® Ankle Boots online on YOOX United Kingdom - 11561385CDDiane Von Furstenberg Court - Women Diane Von Furstenberg Courts online on YOOX United Kingdom - 11447841IF , Jeannot Ankle Boot - Women Jeannot Ankle Boots online on YOOX United Kingdom - 11490837DLNina New York Ankle Boot - Women Nina New York Ankle Boots online on YOOX United Kingdom - 11511472ML , Open Closed Shoes Boots - Men Open Closed Shoes Boots online on YOOX United Kingdom - 11554496RL , Reebok Club C 85 Rs - Sneakers - Men Reebok Sneakers online on YOOX United Kingdom - 11384373FCwomens Jimmy Choo Muliti Floral Pumps Quality and quantity guaranteed , man/woman Native Shoes Blanca Sandals Superb craftsmanship , man/woman Jil Sander JS30072 Sandals main categoryTamaris T-bar sandals Colour: light goldAlberto Zago High heels Colour: brown , Adidas Felmini CREPONA - Ankle boots - james black , Nike Performance COURT AIR ZOOM HC - Multicourt shoesDarichie leather brogues , white + blue, Mellow YellowTommy Jeans BASKET - Trainers - inkMen/Women Jana Boots Colour: black Many varietiesmens/womens Dr. Martens Combs II Boots New design , FitFlop SPORTY CRYSTAL - Trainers Colour: midnight navy , adidas by Stella McCartney ULTRA BOOST - Neutral running shoes Colour: white , men/women adidas Outdoor Terrex Skychaser Sneakers & Athletic adidas Outdoor Characteristics , Men/Women SKECHERS Matera Knocto Sneakers & Athletic SKECHERS Carefully selected materials , Nike Sneakers - Women Nike Sneakers online on YOOX United Kingdom - 11102220WJ , Ballin Espadrilles - Women Ballin Espadrilles online on YOOX United Kingdom - 11432384JB , Trotters Qutie The Trotters Qutie offers quite the impressive comfort and style, perfect for your sophisticated office looks! , Sofft Lorna Per the brand this style is running a half size small, please consider ordering one half size bigger than your normal sizeWOMENS Christian Louboutin Pearl Platforms Has a long reputation , FENTY PUMA by Rihanna White Platform Creepers SneakersMISS Dark Brown Saya Wedges Good worldwide reputation , Women's Burberry Black/ Plaid 40137551 Sneakers Fashion patternwomen Olcay Gulsen 1026 Platforms Qualified production
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.