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.Rodolphe Menudier Ankle Boot - Women Rodolphe Menudier Ankle Boots online on YOOX United Kingdom - 11515702AU , Fiori Di Picche Sneakers - Women Fiori Di Picche Sneakers online on YOOX United Kingdom - 11392096PNTipe E Tacchi Court - Women Tipe E Tacchi Courts online on YOOX United Kingdom - 11448424TSLena Milos Court - Women Lena Milos Courts online on YOOX United Kingdom - 11518159UBIron Fist Boots - Women Iron Fist Boots online on YOOX United Kingdom - 11462237HC , STROVER 1713 ZAPATO PLANO PARA MUJER , LOLAS S046903275mch FASHION LOAFERS FOR WOMENPrada Black High Top Sneaker Sneakers , Dibrera By Paolo Zanoli Sandals - Women Dibrera By Paolo Zanoli Sandals online on YOOX United Kingdom - 11568986ORwomens ALDO Black Bonou Wedges Exquisite workmanshipladies Denim Jeans No Sandals Moderate price , man/woman FitFlop Iqushion Ergonomic Flip-Flops Sandals High gradeAdidas Vero Moda Ankle boots - black , Vans Sneakers - Men Vans Sneakers online on YOOX United Kingdom - 11364113BV , Vans Sneakers - Men Vans Sneakers online on YOOX United Kingdom - 11508819FG , Doucal's Boots - Men Doucal's Boots online on YOOX United Kingdom - 11506323IWASOS DESIGN | ASOS DESIGN desert boots in tan leather with suede detail , ASICS HYPER LD 5 - Spikes - black/ safety yellow1,618 Sandals - Women 1,618 Sandals online on YOOX United Kingdom - 11467482CDSebastian Court - Women Sebastian Courts online on YOOX United Kingdom - 11472058US , Lena Milos Boots - Women Lena Milos Boots online on YOOX United Kingdom - 11525645UR , Gcds Ankle Boot - Women Gcds Ankle Boots online on YOOX United Kingdom - 11454184BW , Antonio Bianchini Loafers - Women Antonio Bianchini Loafers online on YOOX United Kingdom - 44953404XULoretta Pettinari Sandals - Women Loretta Pettinari Sandals online on YOOX United Kingdom - 11385899CX , Pollini Ankle Boot - Women Pollini Ankle Boots online on YOOX United Kingdom - 11446978TJBalenciaga Grey Triple S Sneaker Yellow White Leather Speed Flat Trainer SneakersTory Burch Python Printed Gold Reva Suzy Thong Cork Wedge Sandals , Burberry Nude Pink Women's Folkington Hi Tops Euro 41 SneakersPrada White/Silver Lux Linea Rossa Saffiano Sneakers , Nike White/White Air Max Thea Women's Sneakers
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.