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.Laura Biagiotti Ankle Boot - Women Laura Biagiotti Ankle Boots online on YOOX United Kingdom - 11505785PGSophia Webster Ankle Boot - Women Sophia Webster Ankle Boots online on YOOX United Kingdom - 11218247PL , Australia Luxe Collective Ankle Boot - Women Australia Luxe Collective Ankle Boots online on YOOX United Kingdom - 11475065ONCole Haan Red Nike Air Cushion Sandals , woman Børn Concept Marlys Wedges Many styles , Hackett London TECH ACTIVE - Trainers Colour: black , man/woman Vaneli Ganet Flats Seasonal hot saleLacoste NOVAS - Trainers Colour: dark grey/silver , Adidas Peter Kaiser LIZZY - Classic heels - black , man/woman Adidas Women's Forest Grove Shoes Schuhe Complete specificationAdidas Dockers by Gerli Ankle boots - braun , Ancarani Court - Women Ancarani Courts online on YOOX United Kingdom - 11515560QFNike Sneakers - Men Nike Sneakers online on YOOX United Kingdom - 11545876PTman/woman Steve Madden Rakel Heels Adequate supply and timely delivery , Munich Sneakers - Women Munich Sneakers online on YOOX United Kingdom - 11454302OPGeneve Loafers - Women Geneve Loafers online on YOOX United Kingdom - 11486136GQ , Just Melluso Loafers - Women Just Melluso Loafers online on YOOX United Kingdom - 11535344UO , Roberto Festa Court - Women Roberto Festa Courts online on YOOX United Kingdom - 11450955US , Sergio Rossi Court - Women Sergio Rossi Courts online on YOOX United Kingdom - 11284578HC , women adidas Red Superstar Sneakers brandFashion dynamic Quiksilver Carver SuedeCobian Grace Get into the summer spirit any time of year with the stylish Cobian Grace wedge! , Vince Ranger Lounge in style with the handsome Ranger Slip-On sneakers from VinceClarks Un.ravel Experience a new kind of comfort with the Un.ravel oxfordChristian Louboutin Gold/Beige Rantus Orlato Woman Glitter Hi Top Sneakers Sneakers , Nike Women's Air Huarache Running Sneakers Style/Color: 634835-012 Sneakers , woman Laurence Dacade Black Noe Sandals Big clearance sale , Jimmy Choo Beige/Black Vela Colorblock Slingback Sandals , WOMENS Escada Formal Shoes a great varietyWomen's Danskin Now Yellow Sneakers Sale Italy
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.