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.Elena Iachi Ankle Boot - Women Elena Iachi Ankle Boots online on YOOX United Kingdom - 11176638GMChie Mihara Ankle Boot - Women Chie Mihara Ankle Boots online on YOOX United Kingdom - 11552289DJ , Paul Andrew Ankle Boot - Women Paul Andrew Ankle Boots online on YOOX United Kingdom - 11552787HBDolce&Gabbana Multicolor Embellished Leather Sneakers Sneakers , Golden Goose Deluxe Brand Sneakers - Men Golden Goose Deluxe Brand Sneakers online on YOOX United Kingdom - 11540237GW , Wolverine King Caribou III 9 Inch Soft Toe BootWOMEN Skechers Black Gray Pink Sneakers Exquisite workmanshiplady Nike Black Golf Sneakers Orders are welcome , womens BCBGMAXAZRIA Champagne Ranya Sandals Strong valueReef FANNING - T-bar sandalsCole Haan Tali Modern Bow BalletAdidas Calvin Klein NEEMA - High heels - black , Lanvin Sneakers - Men Lanvin Sneakers online on YOOX United Kingdom - 11327378LFNew Look Wide Fit WIDE FIT TIMMS - High heeled sandals Colour: whiteMiss Selfridge CONNIE HEEL GLADIATOR - Ankle cuff sandals Colour: black , men/women Seychelles Tame Me Boots Strong heat and wear resistance , Carmine Marfé Loafers - Men Carmine Marfé Loafers online on YOOX United Kingdom - 11532562IMmen/women Jambu Iris-Vegan Water Ready Sneakers & Athletic Jambu Known for its beautiful qualityMally Sandals - Women Mally Sandals online on YOOX United Kingdom - 11442614MAP448 Sneakers - Women P448 Sneakers online on YOOX United Kingdom - 11456886XP , Pavin Court - Women Pavin Courts online on YOOX United Kingdom - 11483276AKMulberry Ankle Boot - Women Mulberry Ankle Boots online on YOOX United Kingdom - 11462858RVCollection Privēe? Sandals - Women Collection Privēe? Sandals online on YOOX United Kingdom - 11504603QTVicini Tapeet Sandals - Women Vicini Tapeet Sandals online on YOOX United Kingdom - 11420443NV , Gianvito Rossi Sandals - Women Gianvito Rossi Sandals online on YOOX United Kingdom - 11465695KOCrime London Sneakers - Men Crime London Sneakers online on YOOX United Kingdom - 11511979OR , modern Diamond Supply Co. Milan , FootJoy Black Man Versalux Spikeless Golf Distressed Leather 57252 SneakersValentino Blue Rockstud Navy Pebble Leather Kitten Heel PumpsMISS Jimmy Choo Brown Lang Sandals New design
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.