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 - 11471257HVAlexander Mcqueen Ballet Flats - Women Alexander Mcqueen Ballet Flats online on YOOX United Kingdom - 11507960PP , Carlo Pazolini Espadrilles - Women Carlo Pazolini Espadrilles online on YOOX United Kingdom - 11407574WOAPLAUSO 88908 ZAPATO PLANO PARA MUJER , STROVER 49042 FASHION SANDALS FOR WOMEN , Tory Burch Natural Tan Brown Kailey Wedge Thong Bow Logo Leather 50mm SandalsTory Burch Carnival Red Savannah 45mm Soho Lux Suede Wedge SandalsVERONA 22904c Negro ZAPATO PLANO PARA MUJERTory Burch Blue Color Block Heels Sandals , men/women LAUREN Ralph Lauren Valinda Sandals luxuriousPier One Classic ankle boots - dark brownCassis c?te d'azur INDIE - Over-the-knee boots Colour: noir , men/women Sperry Rosefish Chambray Boat Sperry Recommended today , Crocs CB TIMELESS CLASH ROSES CLOG RELAXED FIT - Mules Colour: red , Men/Women David Tate Euro Boots As of the latest modelCesare Paciotti Boots - Men Cesare Paciotti Boots online on YOOX United Kingdom - 11505018RVVirtus Palestre Sneakers - Men Virtus Palestre Sneakers online on YOOX United Kingdom - 11467595NJ , Nike Performance FLEX CONTROL II - Sports shoes - thunder blue/light carbon/black/atmosphere grey/white , Vans Sneakers - Women Vans Sneakers online on YOOX United Kingdom - 11429049CF , Parlanti Loafers - Women Parlanti Loafers online on YOOX United Kingdom - 11517846RRCasadei Espadrilles - Women Casadei Espadrilles online on YOOX United Kingdom - 11500495FPMarechiaro 1962 Loafers - Women Marechiaro 1962 Loafers online on YOOX United Kingdom - 11548081CW , Marc Ellis Court - Women Marc Ellis Courts online on YOOX United Kingdom - 11210703JTRas Ballet Flats - Women Ras Ballet Flats online on YOOX United Kingdom - 11562719WX , Marco Barbabella Court - Women Marco Barbabella Courts online on YOOX United Kingdom - 11342229WU , Pantofola D'oro Sneakers - Men Pantofola D'oro Sneakers online on YOOX United Kingdom - 11569831GR , VgmJjw3s women Birkenstock Camel Sandals Unique , buy ECCO Golf Golf Lux , a good reputation in the world Sperry Wahoo 2-Eye , Moderate cost Stacy Adams Wally
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.