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.Gianvito Rossi Ankle Boot - Women Gianvito Rossi Ankle Boots online on YOOX United Kingdom - 11111439QJDivine Follie Ankle Boot - Women Divine Follie Ankle Boots online on YOOX United Kingdom - 11562912QULaura Biagiotti Ankle Boot - Women Laura Biagiotti Ankle Boots online on YOOX United Kingdom - 11504447WPNike Performance AIR MAX SEQUENT 4 - Neutral running shoes - midnight navy/obsidian/diffused blue/hyper royal/white , Dibrera By Paolo Zanoli Ankle Boot - Women Dibrera By Paolo Zanoli Ankle Boots online on YOOX United Kingdom - 11446863UX , WOMENS Jimmy Choo Bronze Chiara Wedges Special function , WOMENS Fendi Black White Sandals Elegant and solemnWOMEN Vera Wang Camel Wedges New designNike Sportswear CLASSIC CORTEZ SE - Trainers , Adidas Bruno Premi Sandals - bianco , Clae BRADLEY - Trainers - black , Nine West Faith 40th Anniversary Pump , Keen NEWPORT RETRO - Walking sandals - dark earthHogan Loafers - Women Hogan Loafers online on YOOX United Kingdom - 11157871PRHogan Sneakers - Men Hogan Sneakers online on YOOX United Kingdom - 11415046UT , man/woman VIONIC Kona Sneakers & Athletic VIONIC Known for its good quality , Nike Performance LEBRON SOLDIER XII SFG - Basketball shoes - white , adidas Performance X TANGO 18.4 IN - Indoor football boots , Blumarine Sandals - Women Blumarine Sandals online on YOOX United Kingdom - 11481455AEPrimabase Sneakers - Women Primabase Sneakers online on YOOX United Kingdom - 11451681RD , Rodo Court - Women Rodo Courts online on YOOX United Kingdom - 11089421TD , Philippe Model Sneakers - Women Philippe Model Sneakers online on YOOX United Kingdom - 11560036CN , Robert Clergerie Sandals - Women Robert Clergerie Sandals online on YOOX United Kingdom - 11560506DU , El Campero Boots - Women El Campero Boots online on YOOX United Kingdom - 11545681LF , N° 21 Sneakers - Women N° 21 Sneakers online on YOOX United Kingdom - 11550325WF , Santoni Ankle Boot - Women Santoni Ankle Boots online on YOOX United Kingdom - 11478196UJBargain See by Chloe SB31073AVarious goods Frye Melanie Gore MuleBrand feast Lucky Brand JeweliaMunro American Navy Blue Ariel Snake Print 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.