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.Marina Yachting Ankle Boot - Women Marina Yachting Ankle Boots online on YOOX United Kingdom - 11489162DX , Saint Laurent Ankle Boot - Women Saint Laurent Ankle Boots online on YOOX United Kingdom - 11466453DHJeffrey Campbell Ankle Boot - Women Jeffrey Campbell Ankle Boots online on YOOX United Kingdom - 11467296EN , Marcela Yil Espadrilles - Women Marcela Yil Espadrilles online on YOOX United Kingdom - 11411192MCElvio Zanon Sandals - Women Elvio Zanon Sandals online on YOOX United Kingdom - 11366403VA , Nike Free Tr Flyknit 2 - Sneakers - Women Nike Sneakers online on YOOX United Kingdom - 11315268HR , Ovye' By Cristina Lucchi Sandals - Women Ovye' By Cristina Lucchi Sandals online on YOOX United Kingdom - 11336315QF , Kenneth Cole Pink New York Women's Laken Ruffled Slides Sandals , Tory Burch Roccia Elana Snake Print Mid Heel Pump Sandals , MTNG 55401 Molly V32077 Champagne WEDGE-HEEL SANDALS FOR WOMEN , BOBS from SKECHERS Pop Ups - Beach HeroREFRESH 61853 Tex. Coral WEDGE-HEEL SANDALS FOR WOMEN , PORRONET St 1917 Moka SANDALIA BIO PARA MUJER , Ladies Frye Brown Maye Wedges Suitable for colorScarpa TERRA GTX - Walking boots Colour: brown , Geox HOSMOS ABX - Winter bootsAdidas Wo Solar Glide ST Shoes , men/women See by Chloe SB27062 Loafers Great choice , Adidas Peter Kaiser TIALDA - Classic ankle boots - schwarzEmanuela Passeri Court - Women Emanuela Passeri Courts online on YOOX United Kingdom - 11544501IX , Sam Edelman Court - Women Sam Edelman Courts online on YOOX United Kingdom - 11340101PFMISS Marni Off White Sandals brand , 9uKEwjFU ECCO Sport Offroad Lite SportiOGpOUmZ DVS Shoe Company Cinch LT+ , 9kI7hB1S STROVER 5993 SHOES FOR WOMEN , Attractive and durable Steven Local PumpGiuseppe Zanotti Multi-colored Trainer Suede High-top Sneakers with Zips Rds313 001 Sneakerswoman Modern Vintage Ivory Strap Wedges German OutletsJeffrey Campbell Brown Colombo Strappy Slingback Sandals , LADY J.Crew Nwot Gingham Espadrille Wedges superior
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.