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.Janet Sport Ankle Boot - Women Janet Sport Ankle Boots online on YOOX United Kingdom - 11298887UOmen/women Blue by Betsey Johnson Esme Sneakers & Athletic Blue by Betsey Johnson Comfortable touchJONI 14272 FASHION SANDALS FOR WOMEN , Liu •Jo Shoes Boots - Women Liu •Jo Shoes Boots online on YOOX United Kingdom - 11286099PQDefy Women's Sneakers | Puma Black-Puma WhitePas De Rouge Ankle Boot - Women Pas De Rouge Ankle Boots online on YOOX United Kingdom - 11512732SPCALIFERS Mocasines Mujer Piel Angers Ja608p90-negro FASHION LOAFERS FOR WOMENNike White Navy and Red Blazer Mid Vintage Prm Sneakers , LADY Multicolor Two-tone Strappy Sandals King of the quantity , ladies Jimmy Choo Platform Formal Shoes Pleasant appearance , womens Jeffrey Campbell Black Atsuko Wedges Beautiful art , women Dolce Vita Black Archer Sandals Customer first , mens/womens Reef Gypsy Wrap Sandals Authentic guarantee , mens/womens Cordani Emilio Heels Reliable reputationRoyal RepubliQ SPARTACUS CHUKKA - High-top trainers - black , ASICS STORMER 2 - Neutral running shoes - carbon/black , Dolfie Espadrilles - Men Dolfie Espadrilles online on YOOX United Kingdom - 11581751VCReebok Sneakers - Men Reebok Sneakers online on YOOX United Kingdom - 11585643QW , Men/Women Columbia Stevenson Wallaby LTR Boots a wide variety of goods , adidas Originals | adidas Originals white and navy Stan Smith sneakers , Nike Performance TIEMPO LEGENDX 7 CLUB TF - Astro turf trainers - black/light crimsonTod's Sneakers - Women Tod's Sneakers online on YOOX United Kingdom - 11565146OL , Sebastian Ankle Boot - Women Sebastian Ankle Boots online on YOOX United Kingdom - 11445805OK , Premiata Ankle Boot - Women Premiata Ankle Boots online on YOOX United Kingdom - 11530239TP , Philippe Model Espadrilles - Women Philippe Model Espadrilles online on YOOX United Kingdom - 11343732NTNaot Caprice Keep your look fresh with warm weather style from NaotGolden Goose Deluxe Brand White with Silver Star and Red Back Tip. Worn Once. Purchased From Net-a-porter. Sneakers , womens Prada Black Calzature Donna Sandals Customer first , women Saint Laurent Beige Pump Platforms DiscountMISS Prada Brown/Cream Sandals a great variety
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.