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.Le Stelle Ankle Boot - Women Le Stelle Ankle Boots online on YOOX United Kingdom - 11450633TIEnrico Antinori Ankle Boot - Women Enrico Antinori Ankle Boots online on YOOX United Kingdom - 11501587ASTwin-Set Simona Barbieri Boots - Women Twin-Set Simona Barbieri Boots online on YOOX United Kingdom - 11454098ID , Tabitha Simmons Espadrilles - Women Tabitha Simmons Espadrilles online on YOOX United Kingdom - 11115419JCFlavio Creation Sandals - Women Flavio Creation Sandals online on YOOX United Kingdom - 11431686HF , Viapantaleoni® Ankle Boot - Women Viapantaleoni® Ankle Boots online on YOOX United Kingdom - 11482527NSKenneth Cole New York Design 10505STROVER S23047v18 SANDALIA PLANA DE MUJERTurin_0 Men's Sneakers | Puma Black-Puma White , Ovye' By Cristina Lucchi Court - Women Ovye' By Cristina Lucchi Courts online on YOOX United Kingdom - 11456527TAGolden Goose Deluxe Brand Sneakers - Women Golden Goose Deluxe Brand Sneakers online on YOOX United Kingdom - 11510242AN , See By Chloé Ankle Boot - Women See By Chloé Ankle Boots online on YOOX United Kingdom - 11511264IENew Balance 574 Winter Nubuck - Sneakers - Men New Balance Sneakers online on YOOX United Kingdom - 11393119HBCapri Bijoux Flip Flops - Women Capri Bijoux Flip Flops online on YOOX United Kingdom - 11476148XJwoman Black New Leather Wedges Win the praise of customersMTNG 52177 Mako Moka FASHION FOOTWEAR FOR WOMENmen/women Steve Madden Lover Boots Excellent workmanship , men/women Earth Lacona Earthies Sandals New marketJack Wolfskin ACTIVATE TEXAPORE LOW - Hiking shoes Colour: black , Santoni Court - Women Santoni Courts online on YOOX United Kingdom - 11381550KB , Versace Sandals - Women Versace Sandals online on YOOX United Kingdom - 11516821NSGeox Loafers - Women Geox Loafers online on YOOX United Kingdom - 11548120CP , Rodo Court - Women Rodo Courts online on YOOX United Kingdom - 11255153GW , Skechers Loafers - Women Skechers Loafers online on YOOX United Kingdom - 11557357OPMISS Sergio Rossi Sandals Nice color , ZqKrDiGH BRUNATE 20285 TRAINERS FOR WOMEN , Jimmy Choo Brown Studded Leather Veto Ankle Wrap Block SandalsProenza Schouler White New Leather Platform Slip On Sandals , Tory Burch Ivory 110 Chandler 45mm Tumbled Leather Sandals , ladies Prada Nude Calzature Donna Pumps special discount price
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.