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.Bianca Di Ankle Boot - Women Bianca Di Ankle Boots online on YOOX United Kingdom - 11503364PF , Louis Leeman Ankle Boot - Women Louis Leeman Ankle Boots online on YOOX United Kingdom - 11543067JE , Juli Pascal Paris Court - Women Juli Pascal Paris Courts online on YOOX United Kingdom - 11555973OJ , Claudia By Isaberi Sneakers - Women Claudia By Isaberi Sneakers online on YOOX United Kingdom - 11570088SXL' Autre Chose Sandals - Women L' Autre Chose Sandals online on YOOX United Kingdom - 11342264WBWomen's Joie Black Sandals Immediate deliveryVans U Sk8-Hi Reissue Desert Cowboy - Sneakers - Women Vans Sneakers online on YOOX United Kingdom - 11139540XP , Golden Goose Deluxe Brand Sneakers - Men Golden Goose Deluxe Brand Sneakers online on YOOX United Kingdom - 11375603PK , Ladies Betsey Johnson Green 1996 Sandals Complete specification area , MISS Tory Burch Mini Miller Wedges shopping onlineART 468 FASHION ANKLE BOOTS FOR WOMENmen/women LifeStride Venti Flats Comfortable touch , adidas by Raf Simons Stan Smith , mens/womens Kenneth Cole New York Julian Loafers best sellerP448 Sneakers - Men P448 Sneakers online on YOOX United Kingdom - 11457303RJ , Springa Sneakers - Men Springa Sneakers online on YOOX United Kingdom - 11457314FLman/woman Saucony Havoc XC Flat Sneakers & Athletic Saucony Modern and elegantNike Performance AIR ZOOM PEGASUS 34 - Neutral running shoesMen/Women Kenneth Cole New York Whinnie Clogs & Mules feature , Versace Sandals - Women Versace Sandals online on YOOX United Kingdom - 11057415IRCristin Sneakers - Women Cristin Sneakers online on YOOX United Kingdom - 11314692XP , Vic Matiē Boots - Women Vic Matiē Boots online on YOOX United Kingdom - 11457606RI , Cesare Paciotti Court - Women Cesare Paciotti Courts online on YOOX United Kingdom - 11305585MW , Sam Edelman Sneakers - Women Sam Edelman Sneakers online on YOOX United Kingdom - 11561947IFJimmy Choo Sandals - Women Jimmy Choo Sandals online on YOOX United Kingdom - 11484569HJ , Charlotte Olympia Court - Women Charlotte Olympia Courts online on YOOX United Kingdom - 11022044HIPleasant appearance Miz Mooz Comet , ara Phoebe Create a little stylish pop to your casual or work attire without sacrificing comfort in the Phoebe loafers from araVersace Black Signature Medallion Medusa Head with Chameleon Men's Sneakers 44.5 SneakersAsics Gray and Pink Platinum Gel Respector Sneakers ,
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.