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.Holly Queen Ankle Boot - Women Holly Queen Ankle Boots online on YOOX United Kingdom - 11552155KB , Vagabond Shoemakers Ballet Flats - Women Vagabond Shoemakers Ballet Flats online on YOOX United Kingdom - 11513228MOman/woman Adidas Pureboost Shoes Schuhe Won highly appreciated and widely trusted at home and abroad , Versace Jeans Sneakers - Women Versace Jeans Sneakers online on YOOX United Kingdom - 11433508EUJoshua Sanders Black Bomber Sneakers SneakersWOMEN Nicole Gold Wedges Many stylesCk Calvin Klein Ankle Boot - Women Ck Calvin Klein Ankle Boots online on YOOX United Kingdom - 11485250KV , Golden Goose Deluxe Brand Sneakers - Men Golden Goose Deluxe Brand Sneakers online on YOOX United Kingdom - 11509998MHRED Valentino Silver Womens Metallic Glam Glam High Top Sneaker SneakersRIVIERABONUCCI Sandalias Plataforma Mujer Piel Ja327o64-negro SHOES FOR WOMEN , Donald J. Pliner Beige Leather Mesh Slides 9m Sandals , ladies adidas Pink/Tan Camo Nmd-xr1 Sneakers Low priceman/woman Sigerson Morrison Knox Boots high qualitymens/womens Nanette nanette lepore Poetry Heels elegant , Kenneth Cole New York Change TuneYes I Do PEARLY MODERN - Classic heels Colour: nude , ONLY SHOES ONLAMELIA - High heeled sandals Colour: blue , Nike Sneakers - Men Nike Sneakers online on YOOX United Kingdom - 11504120DO , Springa Boots - Men Springa Boots online on YOOX United Kingdom - 11457269TP , Vans Sneakers - Men Vans Sneakers online on YOOX United Kingdom - 11124000RE , Santoni Boots - Men Santoni Boots online on YOOX United Kingdom - 11262525SH , Sergio Rossi Sneakers - Men Sergio Rossi Sneakers online on YOOX United Kingdom - 11525916OFMally Sandals - Women Mally Sandals online on YOOX United Kingdom - 11376078PXDivine Follie Sandals - Women Divine Follie Sandals online on YOOX United Kingdom - 11570395KS , Primo Emporio Sneakers - Men Primo Emporio Sneakers online on YOOX United Kingdom - 11516402WL2hNx4sMb Dr. Martens Bonny Chukka Boot , Simple Tommy Hilfiger Narcee 2ALDO Frealia Hit the streets and garner attention for your standout look with the ALDO® Frealia sneaker , Isabel Marant Beige Bekett Calfskin Suede Wedge Sneakers SneakersDolce&Gabbana D&g Junior Espadrilles Flip Flop 32 Sandals ,
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.