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.Salvatore Ferragamo Ballet Flats - Women Salvatore Ferragamo Ballet Flats online on YOOX United Kingdom - 11495529XN , Anna Baiguera Boots - Women Anna Baiguera Boots online on YOOX United Kingdom - 11496374FA , Caprice Ankle Boot - Women Caprice Ankle Boots online on YOOX United Kingdom - 11500399RBPOLO RALPH LAUREN Berney BOTíN PLANO DE MUJERlady Nicholas Kirkwood Black Sandra Sandals special purchase , women Nine West Gold Garrano Sandals New style , WOMEN Zara Red Flat Tubular Sandals CheapCharles by Charles David Charles David - Mellow , man/woman TWINSET Slip-ons Popular recommendationD amalitha f sandals , black, Geoxmens/womens Vaneli Titan Heels Most practicalALDO PRYRI - T-bar sandalsLanvin Sandals - Women Lanvin Sandals online on YOOX United Kingdom - 11328630BWYaturni Boots - Men Yaturni Boots online on YOOX United Kingdom - 11068460QF , Cafènoir Sneakers - Men Cafènoir Sneakers online on YOOX United Kingdom - 11267680DB , man/woman ASICS GEL-Kayano? 22 Sneakers & Athletic ASICS Special purchasemen's/women's Jewel Badgley Mischka Alfreda Heels for you to choose , Vans Sneakers - Women Vans Sneakers online on YOOX United Kingdom - 11493523QVValsport Sneakers - Women Valsport Sneakers online on YOOX United Kingdom - 11393743FRUnisa Court - Women Unisa Courts online on YOOX United Kingdom - 11148862LTGiuseppe Zanotti Loafers - Women Giuseppe Zanotti Loafers online on YOOX United Kingdom - 11564604IDMellow Yellow Court - Women Mellow Yellow Courts online on YOOX United Kingdom - 11584246QUF.Lli Bruglia Sandals - Women F.Lli Bruglia Sandals online on YOOX United Kingdom - 11345283TWs1d08xXu Dr. Martens 1461 3-Eyelet ShoeAm4awQI8 Wolverine 1000 Mile 1940 Boot , Adequate supply and timely delivery Tretorn Nylite 18 Plus , Beautiful design Sigerson Morrison Tabitha , Latest styles Vibram FiveFingers Vi-SGiuseppe Zanotti Black Women's Suede Ruffle Heels (18320) Sandals , WOMENS Stuart Weitzman Nudistrong Formal Shoes Unique
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.