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.What For Ankle Boot - Women What For Ankle Boots online on YOOX United Kingdom - 11540344RGGiorgio Brato Sneakers - Women Giorgio Brato Sneakers online on YOOX United Kingdom - 11358694JIHannibal Laguna Court - Women Hannibal Laguna Courts online on YOOX United Kingdom - 11533681POFiorifrancesi Ankle Boot - Women Fiorifrancesi Ankle Boots online on YOOX United Kingdom - 11512422UQ , Carson 2 Nature Knit Women's Running Shoes | Periscope-Puma BlackPuma X Shantell Martin Muse Maia Sm -Sunny Lime - Sneakers - Women Puma X Shantell Martin Sneakers online on YOOX United Kingdom - 11567248BA , New Balance 574 Suede/Mesh Bright Colors - Sneakers - Men New Balance Sneakers online on YOOX United Kingdom - 11466989HE , See By Chloé Ankle Boot - Women See By Chloé Ankle Boots online on YOOX United Kingdom - 11545993TPRIVIERABONUCCI Sandalias Plataforma Mujer Piel Ja71028q38-azul Marino WEDGE-HEEL SANDALS FOR WOMEN , Women's Prada White and Yellow Wedges Excellent featuresWomen's Theory Brown In Sandals Reliable qualitymen/women Lucky Brand Hulumi Sandals Fine art , Sardenha wellington boots , burgundy, Lemon Jelly , Adidas Lazamani T-bar sandals - black , Calvin Klein Jeans WYATT - Trainers , Roberto Cavalli WILLY - TrainersAdidas Dune London KOOL - Platform sandals - white , man/woman Rialto Sydney II Flats Quality and consumer firstmens/womens Vince Verrell Sneakers & Athletic Vince Excellent quality , man/woman Caparros Jessica Heels Elegant and robust menu , Hogan Loafers - Men Hogan Loafers online on YOOX United Kingdom - 11299860VL , Studio Pollini Sandals - Women Studio Pollini Sandals online on YOOX United Kingdom - 11513311TNEmporio Armani Loafers - Women Emporio Armani Loafers online on YOOX United Kingdom - 11570786LD , Bruno Premi Sandals - Women Bruno Premi Sandals online on YOOX United Kingdom - 11463413OP , ladies Cole Haan Stephanie Platforms First class in his class , Tamara Mellon Gold/Pvc Frontline 75 Kitten Heel SandalsGianni Bini Silver 2 Pair Summer Bundle SandalsMISS Miu Miu Black Pump Platforms Good qualityLadies Versace Brown Az-2867 Sandals Popular tide shoes , WOMEN Prada Tan/Brown Sandal Platforms Qualified production ,
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.