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.Stuart Weitzman Ankle Boot - Women Stuart Weitzman Ankle Boots online on YOOX United Kingdom - 11519217IACamilla Elphick Court - Women Camilla Elphick Courts online on YOOX United Kingdom - 11514894RR , ladies Fendi Leopard Sandals Flagship store , women Seychelles Orange Sandals Consumers firstAdidas Originals Eqt Racing Adv Pk W - Sneakers - Women Adidas Originals Sneakers online on YOOX United Kingdom - 11435539LP , Nila & Nila Court - Women Nila & Nila Courts online on YOOX United Kingdom - 11473344BQStacy Adams Abbott Slip Resistant Cap Toe OxfordBASS3D 41217 Lentejuelas Bronce LOW-TOP TRAINERS FOR WOMEN , woman adidas Red Superstar Supercolor. Sneakers Sale ItalyWomen's Nike Air Jordan Retro Sneakers To adoptWOMENS Beverly Feldman Pink/Green/Orange Sandals Rich on-time delivery , Vans | Vans Mustard Old Skool SneakersMen/Women Lauren Lorraine Nicole Boots sell , Kristin Cavallari Laurel Peep Toe BootieNew Look Wide Fit WIDE FIT JAS - Espadrilles , Men/Women Quiksilver Molokai Slab Logo Sandals Sales online storeadidas Originals | adidas Originals Arkyn Sneakers In PinkAdidas Lola Cruz Classic ankle boots - nero , Esprit MARIA SLIP SLOP - T-bar sandals Colour: navyman/woman Chaco Brio Boots Modern and elegant fashionCafènoir Loafers - Men Cafènoir Loafers online on YOOX United Kingdom - 11477946QH , Tod's Sneakers - Men Tod's Sneakers online on YOOX United Kingdom - 11568194EH , Ted Baker | Ted Baker White Leather Sneakers With Floral Sole , Stefania Loafers - Women Stefania Loafers online on YOOX United Kingdom - 11400962CJ , Cult Sandals - Women Cult Sandals online on YOOX United Kingdom - 11126230LRTod's Sneakers - Women Tod's Sneakers online on YOOX United Kingdom - 11412721WNChloé Ankle Boot - Women Chloé Ankle Boots online on YOOX United Kingdom - 11536559HWiMPjqwh9 adidas Copa Tango 18.3 Indoorreasonable price Steve Madden Conspire Bootie , SKECHERS Empire The SKECHERS Empire sneaker offers optimal comfort in a casual style that's sure to be admired
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.