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.Tipe E Tacchi Court - Women Tipe E Tacchi Courts online on YOOX United Kingdom - 11538805VCRodolphe Menudier Ankle Boot - Women Rodolphe Menudier Ankle Boots online on YOOX United Kingdom - 11515433JTOscar Conti Ankle Boot - Women Oscar Conti Ankle Boots online on YOOX United Kingdom - 11510936HXCLARKS Hidi Holly ZAPATILLA CON PLATAFORMA , Converse Chuck Taylor All Star Ox Stone Wash Marine , Venise botillon wellington boots , navy/white, AigleAdidas Asics Tiger GELSAGA - Trainers - white/flash yellow , Adriel wavy high heeled leather sandals , black, ClarksCasadei Court - Women Casadei Courts online on YOOX United Kingdom - 11308889EIPinko Sneakers - Women Pinko Sneakers online on YOOX United Kingdom - 11435911IX , Crocs Sandals - Men Crocs Sandals online on YOOX United Kingdom - 11550295CU , man/woman Frye Phillip Studded Harness Tall Boots Ideal gift for all occasionsmen/women ECCO Kyle Casual Tie Sneakers & Athletic ECCO Price reduction , Hogan Rebel Sneakers - Men Hogan Rebel Sneakers online on YOOX United Kingdom - 11298445PW , Cesare Paciotti Boots - Men Cesare Paciotti Boots online on YOOX United Kingdom - 11509081GHElata Court - Women Elata Courts online on YOOX United Kingdom - 11501927KR , Khrio' Ankle Boot - Women Khrio' Ankle Boots online on YOOX United Kingdom - 11477449BN , Zanfrini Cantù Court - Women Zanfrini Cantù Courts online on YOOX United Kingdom - 11516904TTLeather Crown Sneakers - Women Leather Crown Sneakers online on YOOX United Kingdom - 11258888QDCesare P. Sandals - Women Cesare P. Sandals online on YOOX United Kingdom - 11455256GM , Vagabond Shoemakers Sneakers - Women Vagabond Shoemakers Sneakers online on YOOX United Kingdom - 11448260VQ , Le Silla Court - Women Le Silla Courts online on YOOX United Kingdom - 11523444NUMISS Jimmy Choo Yellow 1 Sandals a good reputation in the worldWOMEN Gianvito Rossi Gold Hydra Sandals A balance between toughness and hardnesswoman LifeStride Taupe Memory Foam Wedges Known for its excellent qualityAsics Black/White/Flask Blue + Pink Gel Kayano 19 SneakersMISS Valentino Nude Or Beige. Pumps Easy to handle , women Nike White 704674 100 Sneakers Professional designMISS Tory Burch Biege Aileen Sandals Most economical , lady Sheridan Mia Red Flower Sandals Germany
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.