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.Festa Milano Ankle Boot - Women Festa Milano Ankle Boots online on YOOX United Kingdom - 11248006JH , Chambre N°133 Loafers - Women Chambre N°133 Loafers online on YOOX United Kingdom - 11512333AKLumberjack Ankle Boot - Women Lumberjack Ankle Boots online on YOOX United Kingdom - 11320826TQLiu •Jo Shoes Ballet Flats - Women Liu •Jo Shoes Ballet Flats online on YOOX United Kingdom - 11029834HXMuse evoKNIT Women's Sneakers | Puma Black-Asphalt-white | PUMA Last chance in your size | PUMA United States , Nila & Nila Loafers - Women Nila & Nila Loafers online on YOOX United Kingdom - 11474108XKlady Tory Burch Black Ali-anteka Sandals special discount priceman/woman ALDO Pepy Boots Stylish and charming , Nightgazer lw se trainers , grey, Nike , New Balance Classics WL574 Art SchoolAdidas ecco SOFT LADIES - Trainers - black , DC Shoes TRIBEKA - Trainers - black gradient , Nike Sneakers - Men Nike Sneakers online on YOOX United Kingdom - 11487148TADiadora Sneakers - Men Diadora Sneakers online on YOOX United Kingdom - 11545551CE , Columbia PEAKFREAK VENTURE MID WP - Walking boots - beigeman/woman ECCO Gillian Casual Slip-On Sneakers & Athletic ECCO Export , mens/womens Dolce Vita Zeek Sneakers & Athletic Dolce Vita New varieties are launched , Dm26 Court - Women Dm26 Courts online on YOOX United Kingdom - 11409058VF , Ea7 Sneakers - Women Ea7 Sneakers online on YOOX United Kingdom - 11513709RP , Antidoti Sandals - Women Antidoti Sandals online on YOOX United Kingdom - 11279389EMFitflop Sandals - Women Fitflop Sandals online on YOOX United Kingdom - 11575129UB , Pomme D'or Loafers - Women Pomme D'or Loafers online on YOOX United Kingdom - 11489112JSHogan Rebel Sneakers - Women Hogan Rebel Sneakers online on YOOX United Kingdom - 11455911RQEmanuela Passeri Court - Women Emanuela Passeri Courts online on YOOX United Kingdom - 11564636TD , Filling Pieces Sneakers - Men Filling Pieces Sneakers online on YOOX United Kingdom - 11567162BC , Givenchy Black Mink Fur Slide SandalsStuart Weitzman Leather Turquoise Embossed Sandals , rFduXTFb CLARKS Emslie Claudia ZAPATO ABOTINADOMunro Lexi Keep a cool vibe in the low profile LexiLadies French Sole Red Gumdrop Wedges The color is very noticeable
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.