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.Minnetonka X Maje Boots - Women Minnetonka X Maje Boots online on YOOX United Kingdom - 11448336TTVic Matiē Ankle Boot - Women Vic Matiē Ankle Boots online on YOOX United Kingdom - 11457894PCMoon Boot Ankle Boot - Women Moon Boot Ankle Boots online on YOOX United Kingdom - 44469406TMEmanuela Passeri Ankle Boot - Women Emanuela Passeri Ankle Boots online on YOOX United Kingdom - 11220161FI , Dolce & Gabbana Sneakers - Men Dolce & Gabbana Sneakers online on YOOX United Kingdom - 11400385EGMalìparmi Ankle Boot - Women Malìparmi Ankle Boots online on YOOX United Kingdom - 44999896WXBruno Premi Sandals - Women Bruno Premi Sandals online on YOOX United Kingdom - 11484146NO , Olivia's Bow Sneakers - Women Olivia's Bow Sneakers online on YOOX United Kingdom - 11525394AQEürosoft by Söfft Multicolor Pedra Snake Print Leather Sandals , Hunter Original Play Boot Tall Rain Bootsman/woman Franco Sarto Gracelynn Sandals Durable service , Men/Women Dunham Graham Chelsea Boots Customer firstmen/women Joie Kaelyn Heels Global salesALDO PEPERMINT - Trainers Colour: whiteSparkly black trainers , black, La Redoute CollectionsWalk London PAISLEY - Slip-ons - blue/goldmen/women adidas Skateboarding Campus Vulc II Sneakers & Athletic adidas Skateboarding International big name , Prezioso Court - Women Prezioso Courts online on YOOX United Kingdom - 11491417PSIcône Sandals - Women Icône Sandals online on YOOX United Kingdom - 11432188NALola Cruz Loafers - Women Lola Cruz Loafers online on YOOX United Kingdom - 11535795AC , Paloma Barceló Espadrilles - Women Paloma Barceló Espadrilles online on YOOX United Kingdom - 11538270SKJp/David Ankle Boot - Women Jp/David Ankle Boots online on YOOX United Kingdom - 11519097NIChloé Ankle Boot - Women Chloé Ankle Boots online on YOOX United Kingdom - 11496891ST , New Balance Sneakers - Men New Balance Sneakers online on YOOX United Kingdom - 11478839PV9WY8cDJn Free People Buena Vista Clog , Exquisite (processing) processing Dr. Scholl's Work Valiant , Customer first Bella-Vita Babs IIMISS J. Jill Brown Sandals Wedges Strong heat and heat resistance , Nike Black Metallic Multicolor Air Jordan 5 Og Sneakerslady Birkenstock Black Arizona Caribou Sandals Sufficient supply
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.