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.Moon Boot Ankle Boot - Women Moon Boot Ankle Boots online on YOOX United Kingdom - 11481845MKLaura Biagiotti Flip Flops - Women Laura Biagiotti Flip Flops online on YOOX United Kingdom - 11566429KLSteve Madden Ankle Boot - Women Steve Madden Ankle Boots online on YOOX United Kingdom - 11572612OO , Carla G. Ankle Boot - Women Carla G. Ankle Boots online on YOOX United Kingdom - 11522934SP , Dolce & Gabbana Sneakers - Women Dolce & Gabbana Sneakers online on YOOX United Kingdom - 11263261JD , Avec Modération Sandals - Women Avec Modération Sandals online on YOOX United Kingdom - 11469439RU , Nila & Nila Court - Women Nila & Nila Courts online on YOOX United Kingdom - 11269257UM , Ash Black with White Sole Jungle Slip-ons SneakersMISS Cole Haan Coral Formal Shoes packaging diversityLOLAS S032300325mpi FASHION ANKLE BOOTS FOR WOMENCHILIPEPPER SHOES 7205-34650 BOTíN PLANO DE MUJER , mtng WENDY - Cowboy/Biker bootsASICS GEL-FASTBALL 3 - Handball shoes - black/shocking orangeUnder Armour SPIETH 2 - Golf shoes Colour: white/midnight navy , men/women Born Gunn Boots Various types and styles , Bikkembergs Sneakers - Men Bikkembergs Sneakers online on YOOX United Kingdom - 11219934RCmen's/women's Reebok Club C 85 W&W Sneakers & Athletic Reebok economic , ASOS DESIGN | ASOS DESIGN oxford brogue shoes in brown leathermen's/women's Hush Puppies Zella Chaste Flats Highly appreciated and widely trusted in and outman/woman Cycleur de Luxe Crossover Sneakers & Athletic Cycleur de Luxe Settlement PriceVans Sneakers - Women Vans Sneakers online on YOOX United Kingdom - 11235433OO , Fornarina Sandals - Women Fornarina Sandals online on YOOX United Kingdom - 11553349QSSoisire Soiebleu Sneakers - Women Soisire Soiebleu Sneakers online on YOOX United Kingdom - 11400544CE , Loretta Pettinari Sandals - Women Loretta Pettinari Sandals online on YOOX United Kingdom - 11565357LWQuality and quantity guaranteed Tallia Orange Salerno , Sofft Sondra Show off your commanding style with the military-inspired Sofft Sondra bootEarth Jaunt The handcrafted Jaunt from Earth perfectly combines refined details in an on-trend athleisure look , WOMEN Pierre Hardy Black Pink Platforms Known for its good quality , Women's Moschino Green/Black Snake Sandals Known for its excellent quality , WOMEN Nike Kobe Ix Em Sneakers Moderate costs
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.