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.Giancarlo Paoli Ankle Boot - Women Giancarlo Paoli Ankle Boots online on YOOX United Kingdom - 11471254CTADIDAS Bb7197 HIGH-TOP TRAINERS FOR MENJimmy Choo Black/White/Red Slingback Pumps Sandalswoman Anne Klein Paisley Sandals finishing , N.D.C. Made By Hand Flip Flops - Women N.D.C. Made By Hand Flip Flops online on YOOX United Kingdom - 11521624MXTwin-Set Simona Barbieri Ankle Boot - Women Twin-Set Simona Barbieri Ankle Boots online on YOOX United Kingdom - 11484916MN , mens/womens LifeStride Defend Flats Known for its excellent qualityAdidas L37 SUPER NOVA - Boots - blackEsprit TIA STUD - Classic ankle boots Colour: black , Santoni Sneakers - Women Santoni Sneakers online on YOOX United Kingdom - 11539237SS , Mizuno Sneakers - Men Mizuno Sneakers online on YOOX United Kingdom - 11098878UM , adidas Originals SUPERSTAR FOUNDATION - Trainers - noir / blancMen/Women Tamaris Sandals Colour: black At an affordable price , Marc Jacobs Sneakers - Men Marc Jacobs Sneakers online on YOOX United Kingdom - 11340319QK , Logan Loafers - Women Logan Loafers online on YOOX United Kingdom - 11493175XL , Melissa Loafers - Women Melissa Loafers online on YOOX United Kingdom - 11530533IP , Dkny Sneakers - Women Dkny Sneakers online on YOOX United Kingdom - 11553832NX , Superga® Sneakers - Women Superga® Sneakers online on YOOX United Kingdom - 11571256SA , Sofia M. Sandals - Women Sofia M. Sandals online on YOOX United Kingdom - 11552702FC , Fiorentini+Baker Ankle Boot - Women Fiorentini+Baker Ankle Boots online on YOOX United Kingdom - 11537028RV , Alberto Fermani Sneakers - Women Alberto Fermani Sneakers online on YOOX United Kingdom - 11563651PEGiuseppe Zanotti Court - Women Giuseppe Zanotti Courts online on YOOX United Kingdom - 11311973VF , Jil Sander Sandals - Women Jil Sander Sandals online on YOOX United Kingdom - 44848298LI , Modern and stylish fashion Merrell Inde Lave Slip-On , Quality products Athena Alexander Orlando , adidas GSG-9.3 Combat-boot tough gets an athletic backup in the adidas GSG-9.3 Desert Low bootsLiu •Jo Shoes Sandals - Women Liu •Jo Shoes Sandals online on YOOX United Kingdom - 11342722SR , Nike White Red Black Kids 2015 Air Jordan 1 Retro High Og Bg Gs Hi Chicago Bulls Sneakerswomens Ann Demeulemeester Black Armida Sandals Different styles and styles , Dansko Pink Leather Multi Strap Golden Gate 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.