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.Giancarlo Paoli Ankle Boot - Women Giancarlo Paoli Ankle Boots online on YOOX United Kingdom - 11478876WM , Converse Jack Purcell Sneakers - Men Converse Jack Purcell Sneakers online on YOOX United Kingdom - 11250978IBKudetà Ankle Boot - Women Kudetà Ankle Boots online on YOOX United Kingdom - 11540105OGGUESS Flfie1 LOW-TOP TRAINERS FOR WOMEN , Converse ALL STAR BASKET WEAVE OX BluePas De Rouge Ankle Boot - Women Pas De Rouge Ankle Boots online on YOOX United Kingdom - 11512732SP , Donald J. Pliner Leoard Mink Print & Patent Leather Heels SandalsWomen's Tory Burch Black Flats Sandals New design , woman Balenciaga White Arena Sneakers Professional designmen's/women's Adidas Jake 2.0 Boots Schuhe buy , mens/womens Sam Edelman Ludlow Heels German OutletsDockers by Gerli High-top trainers Colour: icemens/womens Mezlan Masi Oxfords Direct businessmens/womens El Naturalista Wakataua N5061 Sandals Bright colors , Salomon Sneakers - Men Salomon Sneakers online on YOOX United Kingdom - 11501123UWTod's Loafers - Men Tod's Loafers online on YOOX United Kingdom - 11516984UG , mens/womens Superga 2750 Nylu Sneakers & Athletic Superga Has a long reputationRiver Island | River Island Wide Fit espadrille wedge heels in nude , Wide fit black studded ballet pumps, sizes 38-45 , black, Castaluna , Lacoste Sneakers - Women Lacoste Sneakers online on YOOX United Kingdom - 11275699CPAltraofficina Sandals - Women Altraofficina Sandals online on YOOX United Kingdom - 11495547MEGiuseppe Zanotti Sandals - Women Giuseppe Zanotti Sandals online on YOOX United Kingdom - 11402269EBDiadora Heritage Sneakers - Women Diadora Heritage Sneakers online on YOOX United Kingdom - 11343396PR , Prada Black Saffiano Leather Sneaker Sneakers , Tory Burch Leopard Pony Hair Sandals , Beautiful design Josef Seibel Douglas 06 , Optimal price Franco Sarto ArdenRoper Speed The Roper Speed slip-on shoes give you the freedom of movement and underfoot comfort you need to keep you moving all day long.Pedro Garcia Grey Vacchetta "Eyelet" Castoro Sandalswomens Beige Crocodile 41) 480932 Sandals impeccable
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.