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.Andrea Ventura Firenze Sneakers - Men Andrea Ventura Firenze Sneakers online on YOOX United Kingdom - 11498016MQ , Schutz Ankle Boot - Women Schutz Ankle Boots online on YOOX United Kingdom - 11516403XXMISS Franco Sarto Brown Wedges Stylish , Converse All Star Ct As Hi Glitter - Sneakers - Women Converse All Star Sneakers online on YOOX United Kingdom - 11335936VM , Tipe E Tacchi Sneakers - Women Tipe E Tacchi Sneakers online on YOOX United Kingdom - 11285733QOPEPE JEANS Pls50289 Melting 864 Bronze BOTA OUTDOOR PARA MUJERwoman INC International Concepts Formal Shoes RepairWOMENS Nina Off White Formal Shoes NiceSelected Femme SFPRIM - Espadrilles From , Adidas Kennel + Schmenger TARA - Slip-ons - wave/black , D annya high ankle boots , brown, GeoxAdidas Dune London KALIFORNIA - High heeled sandals - rose goldCtas ii craft leather high top trainers , dark grey, Converse , ASOS DESIGN | ASOS DESIGN Pukka Premium Leather Multi Strap Heels , men's/women's Reebok Astroride 2D Sneakers & Athletic Reebok Sufficient supplySebastian Sandals - Women Sebastian Sandals online on YOOX United Kingdom - 11168064DUEspadrilles Sandals - Women Espadrilles Sandals online on YOOX United Kingdom - 11341504DJAntidoti Sandals - Women Antidoti Sandals online on YOOX United Kingdom - 11401494GIHécos Ankle Boot - Women Hécos Ankle Boots online on YOOX United Kingdom - 11521982TD , Philippe Model Espadrilles - Women Philippe Model Espadrilles online on YOOX United Kingdom - 11343732NT , uIkQdTi2 The North Face Ultra 109 , 7CSAUnTo VICTORIA S014092121mgl ZAPATILLA CON PLATAFORMA , Exquisite processing Sperry Captain's CVO Drink , Maintenance capability Vans Authentic SF , Mephisto Gyna The Mephisto Gyna sneaker isn't an ordinary sneaker. The versatility of casual elegance is a welcome addition to your signature look! , womens Burberry Plaid Sandals Highly praised and appreciated by the audience of consumersZ-Coil White Man Pain Relief Freedom 2000 Sneakers SneakersLadies Alexander McQueen Wolf Platforms Elegant and robust packaging , J. Adams Pink Velvet Daisy Mid Heel Sandalslady Maison Margiela Multi-color Shoes-2364 Sandals Beautiful art
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.