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.Islo Isabella Lorusso Court - Women Islo Isabella Lorusso Courts online on YOOX United Kingdom - 11480740OA , Dries Van Noten Sneakers - Men Dries Van Noten Sneakers online on YOOX United Kingdom - 11501423KD , Dolce & Gabbana Ankle Boot - Women Dolce & Gabbana Ankle Boots online on YOOX United Kingdom - 11232242RVXTI 30612 Metalizado Negro WEDGE-HEEL SANDALS FOR WOMEN , Women's Christian Louboutin Black Tchicaboum Sandals Excellent qualityDC Shoes TRASE - Skate shoes Fromman/woman Sesto Meucci Verve Boots Durable serviceMen/Women Franco Sarto Kairi Boots Clearance sale , Men/Women Blowfish Sharpshooter Boots Exquisite (middle) workmanship , One star leather trainers , khaki, Converse , men's/women's ALDO Fluffy Sandals Authentic guarantee , man/woman Sofft Welling Boots Moderate priceCoolway Freestyle TAHALI - Trainers , Tory Burch Bailey 90mm Ankle Strap , Dirty Laundry Faron Jelly Pool Slide , Men/Women Burton Burton X Frye? '17 Boots Comfortable touchNew Balance ML574 - Trainers - alabaster , Santoni Sneakers - Men Santoni Sneakers online on YOOX United Kingdom - 11540096FKMen/Women K-Swiss Classic VN Sneakers & Athletic K-Swiss Low price , Alisee.. Sandals - Women Alisee.. Sandals online on YOOX United Kingdom - 11476411LQ , Cheville Court - Women Cheville Courts online on YOOX United Kingdom - 11457736IFDsquared2 Ankle Boot - Women Dsquared2 Ankle Boots online on YOOX United Kingdom - 11481240JKArmani Jeans Sandals - Women Armani Jeans Sandals online on YOOX United Kingdom - 11437284NAGuido Sgariglia Sandals - Women Guido Sgariglia Sandals online on YOOX United Kingdom - 11550145LQ , Piampiani Ankle Boot - Women Piampiani Ankle Boots online on YOOX United Kingdom - 11374957KO , N° 21 Sneakers - Women N° 21 Sneakers online on YOOX United Kingdom - 11491602SPQuality and consumer first Supply Lab Deacon , Cobian Floater It's time to start showboatin' with the supreme beachside style of the Floater from Cobian! , LADY Jimmy Choo Black Veto Pumps New varieties are introducedLadies Madden Girl Olive Wedges Easy to clean surface
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.