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.Pas De Rouge Loafers - Women Pas De Rouge Loafers online on YOOX United Kingdom - 11260217NPJ|D Julie Dee Boots - Women J|D Julie Dee Boots online on YOOX United Kingdom - 11497327RF , Dolce & Gabbana Espadrilles - Women Dolce & Gabbana Espadrilles online on YOOX United Kingdom - 11255715SAAlberto Guardiani Sneakers - Women Alberto Guardiani Sneakers online on YOOX United Kingdom - 11325502HRElisabetta Franchi Sandals - Women Elisabetta Franchi Sandals online on YOOX United Kingdom - 11137177UVBLOGGER Bf-5615-1-microfiber THIGH BOOTS FOR WOMENNike Air Force 1 '07 Lv8 Leather - Sneakers - Men Nike Sneakers online on YOOX United Kingdom - 11545231RC , Creation Of Minds Ankle Boot - Women Creation Of Minds Ankle Boots online on YOOX United Kingdom - 11458009RVIsola Black Women's Leather Jewel Ankle Strap 2" Heel Sandals , WOMENS Steve Madden Black Studded Platforms Elegant and robust packaging , FRATELLI MILLORETI C713 WEDGE-HEEL SANDALS FOR WOMEN , Men/Women Gabor Gabor 83.613 Sandals Fine artOffice | Office Fastlane Gray Loafers , men's/women's Marsell Gomme Suede Wingtip Oxford Oxfords High-quality materials , Adidas Vans ERA - Trainers - cadmium green , mens/womens Nine West Martine 3 Heels Settlement Pricemen/women Donald J Pliner Marcio2828 Loafers Order welcomeBikkembergs Sneakers - Men Bikkembergs Sneakers online on YOOX United Kingdom - 11220325QJ , The North Face EDGEWOOD 7 - Walking boots Colour: black/dark , Under Armour MAGNETICO SELECT FG - Moulded stud football bootsRoberto Cavalli Loafers - Men Roberto Cavalli Loafers online on YOOX United Kingdom - 11577308GKMunich Sneakers - Women Munich Sneakers online on YOOX United Kingdom - 11543774DBCastañer Espadrilles - Women Castañer Espadrilles online on YOOX United Kingdom - 11420510SOCasadei Ankle Boot - Women Casadei Ankle Boots online on YOOX United Kingdom - 11544331MTFratelli Rossetti Loafers - Women Fratelli Rossetti Loafers online on YOOX United Kingdom - 11548348FA , Crime London Sneakers - Men Crime London Sneakers online on YOOX United Kingdom - 11484739PF , ALDO Creiwet Perfect your handsome attire with the Creiwet penny loafer, an ALDO classic!Beautiful appearance LADY 297213 Wedges High-quality , MISS Bettye Muller Red Formal Shoes High qualitywoman Christian Louboutin Brown Heels Sandals Hot sale
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.