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.Piero Matteucci Sandals - Women Piero Matteucci Sandals online on YOOX United Kingdom - 11502590SW , Polo Ralph Lauren Train 100 MidAdidas Originals Stan Smith New Bold - Sneakers - Women Adidas Originals Sneakers online on YOOX United Kingdom - 11496741OBAdidas Originals Stan Smith Recon - Sneakers - Men Adidas Originals Sneakers online on YOOX United Kingdom - 11432835MVwomens Nina Black Graysen Formal Shoes Exquisite workmanshipSPROX 389963-b6600 Navy WEDGE-HEEL SANDALS FOR WOMEN , Hummel SLIMMER STADIL - High-top trainers Colour: black/white , men's/women's Loeffler Randall Lyra Heels special functionmens/womens Superga 2750 - Trainers Cost-effective , men's/women's Cordani Oden Sneakers & Athletic Cordani Simple , mens/womens Chrome Ishak Sneakers & Athletic Chrome discountNew Balance MSX90 - Trainers - grey/blueSupra Sneakers - Men Supra Sneakers online on YOOX United Kingdom - 11221382QR , Primo Emporio Sneakers - Men Primo Emporio Sneakers online on YOOX United Kingdom - 11516374HQIl Calzolaio Boots - Men Il Calzolaio Boots online on YOOX United Kingdom - 11477531TC , Formentini Loafers - Women Formentini Loafers online on YOOX United Kingdom - 11478970TCMot-Clè Loafers - Women Mot-Clè Loafers online on YOOX United Kingdom - 11260213EGTod's Sneakers - Women Tod's Sneakers online on YOOX United Kingdom - 11541207EAGiuseppe Zanotti Court - Women Giuseppe Zanotti Courts online on YOOX United Kingdom - 11163412NBDonna Soft Loafers - Women Donna Soft Loafers online on YOOX United Kingdom - 11538199LFGiovanni Conti Loafers - Women Giovanni Conti Loafers online on YOOX United Kingdom - 11477405QBWally Walker Boots - Men Wally Walker Boots online on YOOX United Kingdom - 11370214AQMAgERjZG Under Armour Threadborne Fortis 3Joie Rach The Rach sandal blends contemporary style with endless versatility , LifeStride Cacey Seize the perfect date-night look with the effortlessly-chic Cacey heel by LifeStride!SoftWalk Hanover It's all about the simplistic, fashionable function with the Hanover bootie by SoftWalkChristian Louboutin Brown Pik Boat Python Leopard Roller Spike Sneaker Sneakers , Oscar de la Renta Metallic Silver Crackled Leather Samie Slingback Sandals , Giuseppe Zanotti Bronze and Leopard Opalux Smog SandalsModa Spana Bronze New M Excellent Condition 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.