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.Il Borgo Firenze Loafers - Women Il Borgo Firenze Loafers online on YOOX United Kingdom - 11491409WT , Officine Creative Italia Loafers - Women Officine Creative Italia Loafers online on YOOX United Kingdom - 11562683FL , IMAC 106870 LOW-TOP TRAINERS FOR WOMEN , Adidas Originals Swift Run Pk W - Sneakers - Women Adidas Originals Sneakers online on YOOX United Kingdom - 11325680GPSaucony Jazz Low Pro W - Sneakers - Women Saucony Sneakers online on YOOX United Kingdom - 11241602PU , mens/womens Tommy Hilfiger Naria 2 Flats Brand , GANT MARTIN - Classic ankle boots - graphite gray , Dorothy Perkins STRUT - High heeled sandals Colour: pink , mens/womens Frye Harrison Oxford Oxfords Orders are welcome , Adidas Puma SMASH - Trainers - white/ceruleanNike Sneakers - Men Nike Sneakers online on YOOX United Kingdom - 11335578SQImpronte Sneakers - Men Impronte Sneakers online on YOOX United Kingdom - 11463718GESantoni Sneakers - Men Santoni Sneakers online on YOOX United Kingdom - 11519611LPP448 Sneakers - Men P448 Sneakers online on YOOX United Kingdom - 11495049KLA.Testoni Loafers - Men A.Testoni Loafers online on YOOX United Kingdom - 11353429ET , Bikkembergs Sneakers - Men Bikkembergs Sneakers online on YOOX United Kingdom - 11520786QIadidas Golf CLIMACOOL - Golf shoes Colour: grey one/footwear white/semi frozen yellowDomenico Festa Loafers - Men Domenico Festa Loafers online on YOOX United Kingdom - 11528102IG , Mizuno Sneakers - Women Mizuno Sneakers online on YOOX United Kingdom - 11546184RSDesigual Sneakers - Women Desigual Sneakers online on YOOX United Kingdom - 11574099EP , Axel Arigato Sneakers - Women Axel Arigato Sneakers online on YOOX United Kingdom - 11536407RSLeonardo Principi Boots - Women Leonardo Principi Boots online on YOOX United Kingdom - 11537720CJ , Paloma Barceló Loafers - Women Paloma Barceló Loafers online on YOOX United Kingdom - 11502931GW , Report Goya Break your routine look with the chic and easy Report Goya booties , Osiris Protocol It's SOP for you to look rad. There's no slowing down with Protocol from Osiriswomen Giuseppe Zanotti Anya Star Sandals Fashion patternlady Tory Burch Nude 78b15.54 Sandals Reliable performanceWOMEN Isabel Marant Cognac Brown Sandals Perfect workmanship , Women's Dark Brown Genuine Suede Wedges newcomer , woman Anthropologie Black Platforms Wedges Optimal price
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.