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.Chiara Ferragni Open-Toe Mules - Women Chiara Ferragni Open-Toe Mules online on YOOX United Kingdom - 11492912HE , Coliac Martina Grasselli Sandals - Women Coliac Martina Grasselli Sandals online on YOOX United Kingdom - 11567575VPF.Lli Bruglia Sandals - Women F.Lli Bruglia Sandals online on YOOX United Kingdom - 11408788AKwomen K-Swiss . Sneakers Nice appearancePuma X Sophia Webster Sw Platform Sandal Splatter - Sandals - Women Puma X Sophia Webster Sandals online on YOOX United Kingdom - 11380903MJ , La Bottega Di Lisa Ankle Boot - Women La Bottega Di Lisa Ankle Boots online on YOOX United Kingdom - 11502783FE , Sergio Rossi Ballet Flats - Women Sergio Rossi Ballet Flats online on YOOX United Kingdom - 11088099TB , Adidas El Naturalista LICHEN - Ankle boots - woodmen/women Vince Daria2 Loafers Ranked first in its class , Men/Women Diadora B.Original Sneakers & Athletic Diadora Skilled manufacturingBalet sandals , golden pink, Les Tropeziennes Par M.Belarbimen/women Superfeet Lora Sneakers & Athletic Superfeet realPepe Jeans ADAMS VENUE - Trainers Colour: blackL'INTERVALLE SAWYER - Classic ankle boots Colour: tan , men's/women's SKECHERS Rumblers - Summer Peach Heels Clever and practical , Cinzia Araia Sneakers - Men Cinzia Araia Sneakers online on YOOX United Kingdom - 11493871BNBruno Bordese Sneakers - Men Bruno Bordese Sneakers online on YOOX United Kingdom - 11499712DXPantanetti Loafers - Women Pantanetti Loafers online on YOOX United Kingdom - 11468728FXPantanetti Ankle Boot - Women Pantanetti Ankle Boots online on YOOX United Kingdom - 11120072BI , Roberto Festa Court - Women Roberto Festa Courts online on YOOX United Kingdom - 11544952TK , Karl Lagerfeld Sneakers - Women Karl Lagerfeld Sneakers online on YOOX United Kingdom - 11277451PD , Gianvito Rossi Court - Women Gianvito Rossi Courts online on YOOX United Kingdom - 11204399HX , Pierre Hardy Sneakers - Women Pierre Hardy Sneakers online on YOOX United Kingdom - 11238568XO , woman Clarks Prima Wedges Rich design , QhLbPFQo Summit by White Mountain Kieran , clNOdlJk Danner Springfield Non-Metallic Safety Toe , LADY Robert Clergerie Bronze Platforms Modern and stylish fashion , Opening Ceremony Red Slip-on Platform Sneakers Sneakerswomens ALDO Bronze Glitter Formal Shoes Comfort , womens Tory Burch Pearl Sandals Low price
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.