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.Elvio Zanon Ankle Boot - Women Elvio Zanon Ankle Boots online on YOOX United Kingdom - 11498549CI , Fausto Puglisi Ankle Boot - Women Fausto Puglisi Ankle Boots online on YOOX United Kingdom - 11370869BO , Sigerson Morrison Open-Toe Mules - Women Sigerson Morrison Open-Toe Mules online on YOOX United Kingdom - 11564643BXNike Performance MERCURIAL VAPOR 12 ACADEMY NJR MG - Moulded stud football boots - amarillo/white/blackRocky 6" TechnoRam Comp Toe WPSKECHERS 15316-char SANDALIA PLANA DE MUJERRiaze Prowl Women's Running Shoes | Quarry-Island Paradise | PUMA Forever Buys | PUMA United States , Vans OLD SKOOL REISSUE DX Grey , Tosca Blu Shoes Loafers - Women Tosca Blu Shoes Loafers online on YOOX United Kingdom - 11326322UOMISS Cream Comfy New Wedges Sneakers New style , Men/Women Supra Oakwood Boots Personalization trendMen/Women River Island Slip-ons Colour: white Primary quality , man/woman Rockport Madson Cap Toe Oxfords Order welcome , Santoni Court - Women Santoni Courts online on YOOX United Kingdom - 11477763NKShockly Boots - Men Shockly Boots online on YOOX United Kingdom - 11327756APButtero® Sneakers - Men Buttero® Sneakers online on YOOX United Kingdom - 11164114OL , Doucal's Loafers - Men Doucal's Loafers online on YOOX United Kingdom - 11392197VI , Adidas Candice Cooper ROCK - Trainers - apache nero/vitello biancoSams?e & Sams?e VEST - Trainers - stormy weather , John Galliano Sneakers - Men John Galliano Sneakers online on YOOX United Kingdom - 11516728BC , Profession: Bottier Boots - Men Profession: Bottier Boots online on YOOX United Kingdom - 11552088XS , Cafènoir Sneakers - Women Cafènoir Sneakers online on YOOX United Kingdom - 11406919XGPons Quintana Loafers - Women Pons Quintana Loafers online on YOOX United Kingdom - 11519950BD , Loretta Pettinari Sneakers - Women Loretta Pettinari Sneakers online on YOOX United Kingdom - 11493910NC , Rebecca Minkoff Studded Platform Slide Sandals , At a lower price ECCO Skyler Wedge BootieWe have won praise from our customers. Scott Hawaii Papio , Cole Haan White Patent Air Maddy Thong with Nike Air Sandals , Giuseppe Zanotti Gold/ Beige Hightop Sneakers SneakersDonald J. Pliner Copper Red Cissy 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.