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.Guido Sgariglia Ankle Boot - Women Guido Sgariglia Ankle Boots online on YOOX United Kingdom - 11546713SS , Chie Mihara Dreamy - Sandals - Women Chie Mihara Sandals online on YOOX United Kingdom - 11430096IHL' Autre Chose Sneakers - Women L' Autre Chose Sneakers online on YOOX United Kingdom - 11487502EGNRGY Neko Knit | Pomegranate-Puma Black , Vans Ua Old Skool - Premium Leather - Sneakers - Men Vans Sneakers online on YOOX United Kingdom - 11224635KW , woman Dolce&Gabbana Black Buckle Sandals Ideal gift for all occasions , Nike Performance FLEX 2018 RUN - Trainers , SKECHERS Performance Go Walk 4 - Incredible , Adidas Zign Slip-ons - nudeEtnies KINGPIN - Skate shoes , mens/womens Free People Free Reign Shoeboot Boots Acknowledgement feedbackCu4tro Boots - Men Cu4tro Boots online on YOOX United Kingdom - 11290193JCTod's Boots - Men Tod's Boots online on YOOX United Kingdom - 11035426KC , man/woman Rocket Dog Eldora Heels Let our products go to the worldmens/womens Ahnu Montara II Sneakers & Athletic Ahnu Strong valueadidas Originals | adidas Originals Eqt Support Mid Adv Sneakers In Lime And Black , Dondup Sneakers - Women Dondup Sneakers online on YOOX United Kingdom - 11496979QU , Hogan Sneakers - Women Hogan Sneakers online on YOOX United Kingdom - 11401252KP , Geox Loafers - Women Geox Loafers online on YOOX United Kingdom - 11499011QOD-S!De Sneakers - Women D-S!De Sneakers online on YOOX United Kingdom - 11236356SS , Espadrilles Sandals - Women Espadrilles Sandals online on YOOX United Kingdom - 11462262XGDiesel Ankle Boot - Women Diesel Ankle Boots online on YOOX United Kingdom - 11201617QW , Mephisto Pamela The Mephisto Pamela sandal is sure to become your go-to for this summer season!Aetrex Amelia Aim high for days full of style and comfort with the Aetrex Amelia wedge slide , Mezlan Apolo Styled for the dapper dresser, the Mezlan Apolo monk shoe exudes confidence from toe to heel , Women's Christian Louboutin Silver Bianca Platforms Let our products go out into the worldMM6 Maison Martin Margiela Pink Silver Glitter Sneakers SneakersMISS Salomon Beige Rx Travel Sneakers Sufficient supplyladies Blue Manolo Blahnik Carolyne Pumps Modern design , Montego Bay Club White Pebbled Slip-on Sandals
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.