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.Pons Quintana Ankle Boot - Women Pons Quintana Ankle Boots online on YOOX United Kingdom - 11556307JD , Lea-Gu Ankle Boot - Women Lea-Gu Ankle Boots online on YOOX United Kingdom - 11507905XL , Franca Ankle Boot - Women Franca Ankle Boots online on YOOX United Kingdom - 11472005SCVGE 49346 BOTA OUTDOOR PARA MUJER , Carvela Kurt Geiger Black Suede SneakersWOMENS Vince Tan Sandals New market , Janet & Janet Ankle Boot - Women Janet & Janet Ankle Boots online on YOOX United Kingdom - 11516649DE , Adidas Originals Tubular X Pk - Sneakers - Men Adidas Originals Sneakers online on YOOX United Kingdom - 11307135UB , XTI 30465 Antelina Negro FASHION FOOTWEAR FOR WOMENCobian OAM GRIPSTER - Pool shoes Colour: black , Reebok AHARY RUNNER - Neutral running shoesMen/Women Marc Fisher Gift Flats Sufficient supplymen's/women's ECCO Flash Lattice T-Sandal Sandals leading the fashion , Moma Loafers - Men Moma Loafers online on YOOX United Kingdom - 11326743SKMen/Women Easy Spirit Traveltime 295 Clogs & Mules for you to chooseAdidas Dr. Martens BEVAN EYE BOOT - Cowboy/Biker boots - black , Passion Blanche Boots - Men Passion Blanche Boots online on YOOX United Kingdom - 11462389PUNike Sneakers - Women Nike Sneakers online on YOOX United Kingdom - 44530213IP , Mally Sandals - Women Mally Sandals online on YOOX United Kingdom - 11462965TAAltraofficina Sandals - Women Altraofficina Sandals online on YOOX United Kingdom - 11552777NMDkny Sandals - Women Dkny Sandals online on YOOX United Kingdom - 11466603UW , Hogan Rebel Sneakers - Women Hogan Rebel Sneakers online on YOOX United Kingdom - 11539919RRMarina Yachting Loafers - Women Marina Yachting Loafers online on YOOX United Kingdom - 44450267NR , Philippe Model Sneakers - Women Philippe Model Sneakers online on YOOX United Kingdom - 11481024RM , Order welcome Tommy Bahama Paradise AroundReport Deena Give your look a unique detail with the Report(E) Deena booties , TravisMathew Kruzers Keep your look on point with the TravisMathew Kruzers , Maje Black Mid High Top Trainer Leather and Snake SneakersNike Grey W Air Presto Flyknit Ultra Sneakers , WOMEN L.A.M.B. Tan Gwen Stefani Sandals New design ,
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.