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.Bruno Premi Ankle Boot - Women Bruno Premi Ankle Boots online on YOOX United Kingdom - 11500371BICatarina Martins Ankle Boot - Women Catarina Martins Ankle Boots online on YOOX United Kingdom - 11160732UBLe Ruemarcel Sandals - Women Le Ruemarcel Sandals online on YOOX United Kingdom - 11504606LNChie By Chie Mihara Is-Alora33 - Court - Women Chie By Chie Mihara Courts online on YOOX United Kingdom - 11548557OOFila Heritage Original Fitness - Sneakers - Men Fila Heritage Sneakers online on YOOX United Kingdom - 11379414CG , MTNG 94004 C21337 Madino Negro FASHION BOOTS FOR WOMEN , womens Gianni Bini Black Patent Wedges Rich on-time delivery , man/woman Sperry Saltwater Pearl Boots Innovative design , Men/Women Clarks Bellevue Hazen Loafers Maintenance capability , men's/women's bernie mev. Hilla Boots Reliable reputationmen/women XOXO Cambree Heels Excellent valueAdidas Esprit SIDNEY - High-top trainers - taupe , Mint Velvet ORLA - High heels Colour: gold metallicPollini Sandals - Women Pollini Sandals online on YOOX United Kingdom - 11331927FH , A.Testoni Loafers - Men A.Testoni Loafers online on YOOX United Kingdom - 11543143NPNike Performance VAPOR 12 ELITE SGPRO AC - Moulded stud football boots , Tsd12 Sneakers - Women Tsd12 Sneakers online on YOOX United Kingdom - 11453945SQJeannot Loafers - Women Jeannot Loafers online on YOOX United Kingdom - 11484102RF , Casadei Sandals - Women Casadei Sandals online on YOOX United Kingdom - 11529893XM , Spaziomoda Court - Women Spaziomoda Courts online on YOOX United Kingdom - 11569026MF , Emporio Armani Loafers - Women Emporio Armani Loafers online on YOOX United Kingdom - 11423491HD , Roberto Festa Sandals - Women Roberto Festa Sandals online on YOOX United Kingdom - 11365590AH , Leather Crown Sneakers - Men Leather Crown Sneakers online on YOOX United Kingdom - 11244947SV , jTjfkIzR ECCO 12500359044 TRAINERS FOR WOMEN , Adequate supply and timely delivery Polo Ralph Lauren Dleaney , Strong value Mark Nason Rollins , Puma Midnight Velvet House Of Hackney X Basket Classic SneakersPedro Garcia Grey Suede Leann Ankle Strap Platform High Sandalslady Banana Republic Leopard Wedges a wide range of products , Christian Louboutin Black Patent Leather Heelsx 8.5 (126503) 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.