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.Marco Barbabella Ankle Boot - Women Marco Barbabella Ankle Boots online on YOOX United Kingdom - 11380776SHMm6 Maison Margiela Sneakers - Women Mm6 Maison Margiela Sneakers online on YOOX United Kingdom - 11331299DO , Ruco Line Sneakers - Women Ruco Line Sneakers online on YOOX United Kingdom - 11334933GDNike Performance AIR MAX SEQUENT 3 PREMIUM VARSITY - Neutral running shoes - red crush/wheat gold/blackened blue/light cream/university redAbsinthe Culture Bl28 White+Silver - Sneakers - Women Absinthe Culture Sneakers online on YOOX United Kingdom - 11195404JM , Nike Epic React Flyknit - Sneakers - Women Nike Sneakers online on YOOX United Kingdom - 11549457GK , WOMENS Sam Edelman Black Patti Sandals a wide range of products , lady Tory Burch Aqua/Blue Miller Sandals High quality and economyREFRESH 61500 C Marron WEDGE ANKLE BOOTS FOR WOMENWOMENS Frye Brown Multi Color Sandals Rich on-time deliveryMTNG 55591 Retro Plata SANDALIA PLANA DE MUJER , Nike Black/ White Free Flyknit+ 5.0 Running Sneakerswomens Givenchy Red Rubber Slide Sandals luxuryH by Hudson ALCESTER - Trainers , ASOS DESIGN | ASOS DESIGN loafers in navy diamond printmen's/women's English Laundry St. James Boots Moderate costSantoni Boots - Men Santoni Boots online on YOOX United Kingdom - 11519573XBHogan Sneakers - Men Hogan Sneakers online on YOOX United Kingdom - 11542145WX , Adidas Lauren Ralph Lauren GILDA - Classic ankle boots - black , men's/women's Chinese Laundry Yup Sneakers & Athletic Chinese Laundry Export , Bruno Bordese Boots - Men Bruno Bordese Boots online on YOOX United Kingdom - 11496749IP , Filling Pieces Sneakers - Men Filling Pieces Sneakers online on YOOX United Kingdom - 11128255RB , Nike SB SOLARSOFT PORTMORE II CNVS PREMIUM - Trainers - red crush/white/blue voidConni Boots - Women Conni Boots online on YOOX United Kingdom - 11517547MLGarrice Sandals - Women Garrice Sandals online on YOOX United Kingdom - 11560312VSCafènoir Flip Flops - Women Cafènoir Flip Flops online on YOOX United Kingdom - 11381383BUservice Sperry Oasis Dock Seasonal , Excellent value M&F Western Rocki , ELltSZlS Women's OTBT Rust Sandals Modern , women Birkenstock Rose Gold Gizeh Sandals Stylish
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.