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.Alberto Venturini Ankle Boot - Women Alberto Venturini Ankle Boots online on YOOX United Kingdom - 11468237ND , Stuart Weitzman Ankle Boot - Women Stuart Weitzman Ankle Boots online on YOOX United Kingdom - 11250104RIWindsor Smith Ankle Boot - Women Windsor Smith Ankle Boots online on YOOX United Kingdom - 11283518EE , Andìa Fora Sneakers - Women Andìa Fora Sneakers online on YOOX United Kingdom - 11337558MTTwin-Set Simona Barbieri Ballet Flats - Women Twin-Set Simona Barbieri Ballet Flats online on YOOX United Kingdom - 11239451CE , Tua By Braccialini Ankle Boot - Women Tua By Braccialini Ankle Boots online on YOOX United Kingdom - 11266504VIWOMENS Franco Sarto Chocolate Brown Wedges Make full use of materialsGEOX U84r3f 0me22 U Box Cf49a Navy LOW-TOP TRAINERSANGEL INFANTES 04052-1 ZAPATOS DE VESTIR PARA HOMBREWomen's Bally Gray Suede Rocker Sandals Excellent qualityThe North Face Hedgehog Fastpack Mid GTXWomen's Prada Black 1x022b Platforms Online salesTommy Hilfiger METALLIC - Ballet pumps Colour: black , men/women Bedroom Athletics Violet Slippers Complete specification , Men/Women Bandolino Stepa Heels In short supplyAdidas Pretty Ballerinas ANGELIS - Slip-ons - radice/ami goldy/risha , men's/women's Swedish Hasbeens Cross Strap Debutant Heels Different stylesmens/womens Taos Footwear Standout Boots Win highly appreciatedEl Naturalista NIDO - Ankle boots Colour: brownman/woman VIONIC Cozy Ida Slipper Slippers High quality and low overheadMunich Sneakers - Women Munich Sneakers online on YOOX United Kingdom - 11446372ECAlberto Guardiani Loafers - Women Alberto Guardiani Loafers online on YOOX United Kingdom - 11325478QGEmanuela Passeri Loafers - Women Emanuela Passeri Loafers online on YOOX United Kingdom - 11444649LCe8BXqOPP adidas Outdoor CLIMACOOL Jawpaw Slip-On , Simple Steve Madden Abigail Heel , Beautiful color Roper Patriotic Fringe , Avenger A7232 Make your days on the worksite easier with the Avenger A7232 steel-toe workbootMaison Margiela Multicolor and Blue #13623 Color Spilled Sneaker Sneakersladies Prada Black Bejeweled Formal Shoes Comfortlady Prada Pink Sandal Pumps Nice color
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.