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.Windsor Smith Ankle Boot - Women Windsor Smith Ankle Boots online on YOOX United Kingdom - 11479569EW , Liu ?Jo Shoes Sneakers - Women Liu ?Jo Shoes Sneakers online on YOOX United Kingdom - 11263398HJ , Vans Men Black Ball Hi Sf (Black) Men's Skate Sneakers , Kelsi Dagger Black "Gina" Buckle In (Givenchy Look-a-likes) Sandals , womens Cole Haan Black Zerogrand Sandals High securitymen's/women's Nina Idabell Heels List of explosions , men/women LifeStride Sims Loafers special promotion , Gentle Souls by Kenneth Cole BettieHudson London WATCHLEY - Classic ankle boots - black , mens/womens Chippewa 5" Whirlwind Dress Chukka Boots First qualitymen's/women's See by Chloe SB28201 Sandals First quality , New Look MACKIE - Trainers Colour: bright red , Men/Women Sol Sana Hamilton Slide Clogs & Mules special promotionAdidas Originals Sneakers - Men Adidas Originals Sneakers online on YOOX United Kingdom - 11410688DTCasadei Court - Women Casadei Courts online on YOOX United Kingdom - 11450993MWDsquared2 Sandals - Women Dsquared2 Sandals online on YOOX United Kingdom - 11067707SU , Geox Sandals - Women Geox Sandals online on YOOX United Kingdom - 11475573CLAnna F. Loafers - Women Anna F. Loafers online on YOOX United Kingdom - 11516019FPChiarini Bologna Loafers - Women Chiarini Bologna Loafers online on YOOX United Kingdom - 11537316CD , Hogan Rebel Sneakers - Women Hogan Rebel Sneakers online on YOOX United Kingdom - 11396131MR , Ruco Line Sneakers - Women Ruco Line Sneakers online on YOOX United Kingdom - 11476931HD1ZpDcdtA SKECHERS Work Queznell ST WP , Strong value Tommy Hilfiger Bowman 8 , The latest technology Pikolinos Palermo M3H-6157Trask Lowell Celebrate classicism by adding to your seasonal collection with the Trask Lowell cap toe boot , ladies Donald J. Pliner Vinod-60 Sandals a wide range of productsLiz Claiborne Taupe with Gold Buckles New Shoes/Nib Sandalswomen Bandolino Black Leather Wedges Elegant and robust menulady Prada Pink/Chocolate Fringed Kitten Sandals Rich on-time delivery , Women's Air Jordan Retro 2 Sneakers Good design
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.