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.Chiara Ferragni Ankle Boot - Women Chiara Ferragni Ankle Boots online on YOOX United Kingdom - 11550493JB , Rizzoli Calzature Sandals - Women Rizzoli Calzature Sandals online on YOOX United Kingdom - 11506435IN , L' Autre Chose Sandals - Women L' Autre Chose Sandals online on YOOX United Kingdom - 11423395HQDaniele Ancarani Court - Women Daniele Ancarani Courts online on YOOX United Kingdom - 11524205NJ , hrOKBhaa man/woman Naturalizer Carah Flats fashionable , Open Closed Shoes Boots - Men Open Closed Shoes Boots online on YOOX United Kingdom - 11497933JOwomen Tory Burch 12345 Wedges Used in durabilityAlexandre Birman Black and White Tie Sandals , Adidas Zign High heels - greymen/women H by Hudson Swathmore Boots Great choiceQuattrobarradodici Sneakers - Men Quattrobarradodici Sneakers online on YOOX United Kingdom - 11573465MVIgi&Co Boots - Men Igi&Co Boots online on YOOX United Kingdom - 11557014ML , Santoni Boots - Men Santoni Boots online on YOOX United Kingdom - 11478509EJ , Dsquared2 Sneakers - Men Dsquared2 Sneakers online on YOOX United Kingdom - 11554311IJ , men/women Crocs Kinsale Static Slip-On Sneakers & Athletic Crocs Very good colorman/woman Northside Brille II Water Shoe Sneakers & Athletic Northside low costmen's/women's Diadora V7000 Weave Sneakers & Athletic Diadora the most economical , men/women bernie mev. Barcelona Sneakers & Athletic bernie mev. Elegant and stable packagingSchutz Sandals - Women Schutz Sandals online on YOOX United Kingdom - 11122496KGIndaia Sneakers - Women Indaia Sneakers online on YOOX United Kingdom - 11509404KDCasadei Boots - Women Casadei Boots online on YOOX United Kingdom - 11529266HEMjus Ankle Boot - Women Mjus Ankle Boots online on YOOX United Kingdom - 11485637DA , Icône Ankle Boot - Women Icône Ankle Boots online on YOOX United Kingdom - 11521408DJ , Steve Madden Boots - Women Steve Madden Boots online on YOOX United Kingdom - 11461360BB , Divine Follie Sandals - Women Divine Follie Sandals online on YOOX United Kingdom - 11571030NICustomer first Capezio Canvas Dansneaker®ALDO Welawien Lounge in supreme comfort with the ALDO Welawien sandal , Miu Miu Black Designer Patent Leather Gold Kitten 35.5 New Sandals , Prada Brandy (Natural) (Calzature Donna) Leather Embellished T-strap Euro SandalsWOMEN Versace Black Gianni 38.5 Sandals to buy
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.