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.womens Tory Burch Snakeskin Sandals Stylish , Ancient Greek Sandals Flip Flops - Women Ancient Greek Sandals Flip Flops online on YOOX United Kingdom - 11417606WR , Nike Army Olive 5.0 / Buff Ice Blue Women's 308975 321 SneakersRIVIERABONUCCI Sandalias Plataforma Mujer Piel Ja327o64-negro SHOES FOR WOMENwomen Tod's Black Patent Pumps Reasonable price , men's/women's Nine West Jilene Boots Packaging diversityman/woman SOLE Beach Flips Sandals Primary quality , Marco Tozzi High heeled ankle boots , SKECHERS Performance Go Walk 4 - Incrediblemen's/women's EuroSoft Vali Heels Superb craftsmanshipKenneth Cole New York DOUBLE HEADER - High-top trainers , men/women Tata Italia Sandals Colour: jeans Fashion dynamicHogan Sneakers - Women Hogan Sneakers online on YOOX United Kingdom - 11567738TT , Mulo Espadrilles - Men Mulo Espadrilles online on YOOX United Kingdom - 11558272TE , Lost Ink Wide Fit WIDE FIT AMILY COURT - High heelsMen/Women bernie mev. Gummies Fly Sneakers & Athletic bernie mev. valueAdidas Nike Sportswear CLASSIC CORTEZ - Trainers - muted bronze/white , Roberto Botticelli Sneakers - Men Roberto Botticelli Sneakers online on YOOX United Kingdom - 11512668DIFabiano Ricci Loafers - Men Fabiano Ricci Loafers online on YOOX United Kingdom - 11374984IBCarrano Sandals - Women Carrano Sandals online on YOOX United Kingdom - 11268476NGDivine Follie Court - Women Divine Follie Courts online on YOOX United Kingdom - 11563272IM , Geox Ankle Boot - Women Geox Ankle Boots online on YOOX United Kingdom - 11497082HO , Hogan Rebel Sneakers - Women Hogan Rebel Sneakers online on YOOX United Kingdom - 11347045VI , Rene' Caovilla Court - Women Rene' Caovilla Courts online on YOOX United Kingdom - 11354095MCTabitha Simmons Sandals - Women Tabitha Simmons Sandals online on YOOX United Kingdom - 11476986LGVery good classification See by Chloe SB31141A , various kinds Volcom Easy Breezy SandalsLADY Stella McCartney Black Scarpa Wedges Win the praise of customersWomen's Jack Rogers Orange/Ivory 'georgica' Sandals Excellent valueDries van Noten Brown Jewel Embellishment Sandals
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.