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 - 11477248LU , Laura Bellariva Ballet Flats - Women Laura Bellariva Ballet Flats online on YOOX United Kingdom - 11546222XR , Roberto Della Croce Sneakers - Women Roberto Della Croce Sneakers online on YOOX United Kingdom - 11456028VFFavia Calzature Sandals - Women Favia Calzature Sandals online on YOOX United Kingdom - 11476409SS , Nike Air Max 90 Ultra - Sneakers - Men Nike Sneakers online on YOOX United Kingdom - 11189392LM , DLIRO Zapato Dliro De Piel Negro 6350 SHOES FOR WOMEN , MTNG 69023 C23771 Acuarel Ne LOW-TOP TRAINERS FOR WOMEN , ECCO 217043 ZAPATO DE CU?A PARA MUJER , man/woman Diane von Furstenberg Fonseca Heels Clearance , Sixtyseven NEWAM - Classic heels Colour: blackmen/women Calvin Klein Fridelle Flats service , Pier One Moccasins - tanOYSHO DAMEN - Slippers Colour: beige , man/woman Ryka Celeste Sneakers & Athletic Ryka Most practical , Fila BLOCK MID - High-top trainers Colour: whiteDiadora Sneakers - Men Diadora Sneakers online on YOOX United Kingdom - 11360691DV , Church's Boots - Men Church's Boots online on YOOX United Kingdom - 11485323EBAntica Cuoieria Loafers - Men Antica Cuoieria Loafers online on YOOX United Kingdom - 11532024BO , Superga® Sneakers - Women Superga® Sneakers online on YOOX United Kingdom - 11438354AH , Miista Sandals - Women Miista Sandals online on YOOX United Kingdom - 11261819RTButtero® Boots - Women Buttero® Boots online on YOOX United Kingdom - 11562540FTImage Court - Women Image Courts online on YOOX United Kingdom - 11517445BGSax Ankle Boot - Women Sax Ankle Boots online on YOOX United Kingdom - 11525023SM , Collection Privēe? Sandals - Women Collection Privēe? Sandals online on YOOX United Kingdom - 11511046LLt3HU7eBm Cole Haan Vesta Pump 85MMWOMENS Pedro Garcia Navy Mel Sandals Known for its excellent quality , Maison Margiela White 22 Women's Leather Loafers Sneakers , women Marni Blue/Olive/Black Ruffle Platform Sandals Strong valuewomen Olcay Gulsen 1026 Platforms Qualified productionwomens Steve Madden Brown Sandals Special function
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.