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.Crisian London Ankle Boot - Women Crisian London Ankle Boots online on YOOX United Kingdom - 11468305EFVic Matiē Ankle Boot - Women Vic Matiē Ankle Boots online on YOOX United Kingdom - 11457659HX , men/women Pearl Izumi X-Alp Launch II Sneakers & Athletic Pearl Izumi Adequate supply and timely delivery , Pantofola D'oro Sneakers - Women Pantofola D'oro Sneakers online on YOOX United Kingdom - 44988087LR , Pomme D'or Court - Women Pomme D'or Courts online on YOOX United Kingdom - 11497470QTlady Vince Wedge Sandals Consumers first , L' Autre Chose Ballet Flats - Women L' Autre Chose Ballet Flats online on YOOX United Kingdom - 11532473JQ , New Balance Boracay Fresh Foam - Sneakers - Men New Balance Sneakers online on YOOX United Kingdom - 44991464IT , Adidas Originals Zx Flux - Sneakers - Men Adidas Originals Sneakers online on YOOX United Kingdom - 44964901PSlady Vera Wang Brown Embellished Sandals Win the praise of customers , Foot Petals Heavenly Heelz Technogel with Softspots 2-Pair PackWOMENS Nude Kitten Heel Formal Shoes Durable service , man/woman Pelle Moda Kay Heels Upper materialman/woman Steve Madden Polite Sandals Exquisite processing , mens/womens Reef Draftsmen Lux Sandals Skilled manufacturingKurt Geiger PIA - Slip-ons Colour: black , FitFlop H-Bar Slide Sandals - Latticed Leather , Adidas Sneakers - Men Adidas Sneakers online on YOOX United Kingdom - 11553610JRBikkembergs Loafers - Men Bikkembergs Loafers online on YOOX United Kingdom - 41790973PPAdidas Peter Kaiser ULIC - Ankle boots - intense johnGiovanni Conti Sneakers - Men Giovanni Conti Sneakers online on YOOX United Kingdom - 11471611LJ , Anastasio Court - Women Anastasio Courts online on YOOX United Kingdom - 11549485JSSchutz Sandals - Women Schutz Sandals online on YOOX United Kingdom - 11517276EM , Gianfranco Lattanzi Boots - Women Gianfranco Lattanzi Boots online on YOOX United Kingdom - 11305851TG , Le Silla Sandals - Women Le Silla Sandals online on YOOX United Kingdom - 11408535FE , jGmP6VzP G.H. Bass & Co. Conner , Easy life Vans Classic Slip-OnSAS Harmony Let your life fall into perfect Harmony with this relaxing sandal from SAS , Aravon Patrina-AR Put your best foot forward in the professional Patrina ankle boot , women Fendi Decolette Vernice Platforms High quality
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.