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.Jeffrey Campbell Ankle Boot - Women Jeffrey Campbell Ankle Boots online on YOOX United Kingdom - 11195972BD , Pop Boy Ankle Boot - Women Pop Boy Ankle Boots online on YOOX United Kingdom - 11479719EVLe Coq Sportif Sneakers - Men Le Coq Sportif Sneakers online on YOOX United Kingdom - 11568976LI , Rag & Bone Ankle Boot - Women Rag & Bone Ankle Boots online on YOOX United Kingdom - 11562700CM , KICKERS 420390-30 Bomdia 4 Rouge Orange SANDALIA BIO PARA MUJER , ladies Dior White - Formal Shoes Guarantee quality and quantityWOMEN Black Pink Logo Kcf147lab Sandals High quality productsGiuseppe Zanotti Gold Bronze Beaded Kitten Heel Sandals , Birkenstock ARIZONA - Mules Colour: whiteConverse Chuck Taylor? All Star Blocked Nubuck OxMen/Women Palladium Pallabosse Chelsea L Boots wonderfulCtas nubuck ox trainers , grey, Converse , Lost Ink TATE VAMP BASIC COURT - High heelsMen/Women Marc Jacobs Dani Wedge Espadrille Heels Authentic guaranteeConverse | Converse Chuck Taylor Low Sneakers In Bluemen/women Keds Grasshoppers by Keds-Rose Sandals Many varieties , men's/women's Katy Perry The Jimmi Sandals Comfortable feelingCasadei Court - Women Casadei Courts online on YOOX United Kingdom - 11126426JV , Be Mine | Be Mine Bridal Mae Ivory Satin Embellished Ankle Strap Sandals , man/woman inov-8 Terraclaw? 250 Sneakers & Athletic inov-8 Selling new productsSaint Laurent Boots - Men Saint Laurent Boots online on YOOX United Kingdom - 11254122AMEbarrito Loafers - Women Ebarrito Loafers online on YOOX United Kingdom - 11519399MJ , Melluso Loafers - Women Melluso Loafers online on YOOX United Kingdom - 11535026SM , Giampaolo Viozzi Sandals - Women Giampaolo Viozzi Sandals online on YOOX United Kingdom - 11360734EIMarsèll Ankle Boot - Women Marsèll Ankle Boots online on YOOX United Kingdom - 11476047UP , Marsèll Ankle Boot - Women Marsèll Ankle Boots online on YOOX United Kingdom - 11388312BWWomen's Ash Roccia Virginia Sneakers quality , fvwPfdoy Ladies Brown/Linen Platforms settlement PriceNike Blue Roshe Ld-1000 Womens Running Orange 8.5/39 New SneakersWOMENS Fendi Brown Monogram Wooden Sandals Elegant shape
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.