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.Chiarini Bologna Ankle Boot - Women Chiarini Bologna Ankle Boots online on YOOX United Kingdom - 11359980NGClarks Originals Ankle Boot - Women Clarks Originals Ankle Boots online on YOOX United Kingdom - 11545584LKL'f Shoes Loafers - Women L'f Shoes Loafers online on YOOX United Kingdom - 11514618KEPantofola D'oro Sneakers - Women Pantofola D'oro Sneakers online on YOOX United Kingdom - 11456356VPStacy Adams M2 Wingtip Chelsea BootEZZIO 38008-doralatina WEDGE-HEEL SANDALS FOR WOMEN , Nike Blue and Black Foamposite Sneakers , IGNITE Limitless SR-71 Unrest Sneakers | Puma Black | PUMA Mens | PUMA United StatesMen/Women Giuseppe Zanotti I780005 Boots Quality queenman/woman Roper Sunny Sandals Popular recommendationPatent yellow crossover strap sandals , yellow, La Redoute Collections , Paco Gil EMILIE - High heeled ankle boots Colour: grigio , Massimo Dutti MIT BROGUING - Classic ankle boots Colour: brown , mens/womens Tommy Hilfiger Platform sandals Excellent craft , men's/women's Seychelles Interstate Sandals Strong heat and wear resistancemen's/women's Earth Essen Earthies Flats Win highly appreciatedGeox Sneakers - Men Geox Sneakers online on YOOX United Kingdom - 11253209XTNike Sneakers - Men Nike Sneakers online on YOOX United Kingdom - 11335579EQ , Adidas Originals Sneakers - Men Adidas Originals Sneakers online on YOOX United Kingdom - 11382264XX , Arfango Loafers - Women Arfango Loafers online on YOOX United Kingdom - 11475055CFFormentini Loafers - Women Formentini Loafers online on YOOX United Kingdom - 11479020CJ , Chantal Court - Women Chantal Courts online on YOOX United Kingdom - 11459996OG , 1,618 Sandals - Women 1,618 Sandals online on YOOX United Kingdom - 11537337EURoger Vivier Court - Women Roger Vivier Courts online on YOOX United Kingdom - 11501071UNChie Mihara Sandals - Women Chie Mihara Sandals online on YOOX United Kingdom - 11359426CNBest-selling worldwide Corral Boots A2963 , Various latest designs Spring Step RorieWOMEN Paul Green Black Dazzle Wedges New products in 2371 , woman Tony Bianco Nude Filante Sandals in short supplyladies Chloé Brown Patent Sandals High quality and cheap
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.