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.mens/womens inov-8 F-Lite 195 Sneakers & Athletic inov-8 Let our goods go to the worldJ|D Julie Dee Espadrilles - Women J|D Julie Dee Espadrilles online on YOOX United Kingdom - 11355432BEWomen's Birkenstock Brown Tatami Sandals Strong heat and wear resistanceWOMEN Prada Floral Patent Leather Pumps Big clearance sale , womens Jimmy Choo Black Agnes Pumps Stylish , LEMON JELLY CRYSTAL - Pool slidersFitFlop Mukluk Shorty II Boots w/ TasselsMen/Women Eric Michael Myra Flats Quality and quantity guaranteedmen's/women's CL By Laundry Dara Heels Tide shoes list , Kennel + Schmenger SELMA - Classic ankle bootsmen's/women's Rupert Sanderson Sindy Heels Easy to use , Hunter | Hunter original tall wellies in black , Adidas Chi Chi London DANIELLE - High heels - light grey , man/woman Cole Haan Studiogrand Ballet Flats a lot of varietiesMen/Women Lacoste Avenir 218 1 Sneakers & Athletic Lacoste The highest quality material , Rayne Court - Women Rayne Courts online on YOOX United Kingdom - 11456462GIHenderson Sneakers - Women Henderson Sneakers online on YOOX United Kingdom - 11452441IMCafènoir Sneakers - Women Cafènoir Sneakers online on YOOX United Kingdom - 11376437VW , Paloma Barceló Espadrilles - Women Paloma Barceló Espadrilles online on YOOX United Kingdom - 11538263PC , Leather Crown Sneakers - Women Leather Crown Sneakers online on YOOX United Kingdom - 11197542DP , What For Court - Women What For Courts online on YOOX United Kingdom - 11534134UMMystique Flip Flops - Women Mystique Flip Flops online on YOOX United Kingdom - 11439183PQLe Silla Court - Women Le Silla Courts online on YOOX United Kingdom - 11523444NU , RHgEHWjZ Woolrich Fully Wooly Ice Cougar , A3OkQNcZ BUGATTI 5007pl SHOES FOR WOMENQuality and consumer first ASICS Cheer 8 , Christian Louboutin Burgundy Louis Orlato Orthodox Spike Patent Sneaker Flat 40 Sneakers , Miu Miu Black Designer Patent Leather Gold Kitten 35.5 New SandalsLADY Jimmy Choo Black Sexy Sandals Big saleValentino Black Noir The Rockstud Pump 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.