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.Police 883 Ankle Boot - Women Police 883 Ankle Boots online on YOOX United Kingdom - 11475855RCCatarina Martins Ankle Boot - Women Catarina Martins Ankle Boots online on YOOX United Kingdom - 11507329FWLove Moschino Ankle Boot - Women Love Moschino Ankle Boots online on YOOX United Kingdom - 11371637LF , Maison Margiela Ankle Boot - Women Maison Margiela Ankle Boots online on YOOX United Kingdom - 11308338TRSKECHERS 14610 BOTíN PLANO DE MUJERLanvin Burgundy Low Top Sneakers Sneakers , Nine West Black Slip On SandalsWOMENS SCHUTZ Salmon Wedges Buy onlineladies Nike Cream Sneakers High securityIfK41LP5 Men/Women Splendid Bailee Flats wonderfulTipe E Tacchi Ankle Boot - Women Tipe E Tacchi Ankle Boots online on YOOX United Kingdom - 11448396EKOfficine Creative Italia Ankle Boot - Women Officine Creative Italia Ankle Boots online on YOOX United Kingdom - 11247385MTEnrico Fantini Change! Sneakers - Women Enrico Fantini Change! Sneakers online on YOOX United Kingdom - 11460058SAMen/Women LifeStride Theory Heels Very good classificationmen's/women's Lucky Brand Dristel Sandals good qualityGARMENT PROJECT ACE TECH - Trainersmen/women Trotters Gina Sandals Durable serviceMen/Women ALDO Lovoasien Heels Breathable shoes , mens/womens Nine West Crevette Flats High quality and economyPearl Izumi SELECT ROAD V5 - Cycling shoes - white/black , men's/women's Jewel Badgley Mischka Lorena Heels Don't worry when shopping2Star Sneakers - Women 2Star Sneakers online on YOOX United Kingdom - 11339460EPBallerina Ballet Flats - Women Ballerina Ballet Flats online on YOOX United Kingdom - 11475265LJ , Meltin Pot Sneakers - Women Meltin Pot Sneakers online on YOOX United Kingdom - 11384261OI , LADY Prada Navy Sneakers Excellent value , 8awb4Bq3 ECCO Soft 7 GORE-TEX TieFamous store Vince Camuto Diandra , a lot of varieties Wolverine Rigger MidMezlan Fermo Step up in style with the sleek Mezlan Fermo oxford , WOMEN Bernardo Taupe Suede Holly Sandals Diverse new design
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.