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.Alberta Ferretti Open-Toe Mules - Women Alberta Ferretti Open-Toe Mules online on YOOX United Kingdom - 11468920BPGuido Sgariglia Ankle Boot - Women Guido Sgariglia Ankle Boots online on YOOX United Kingdom - 11546620EDDonna Più Ankle Boot - Women Donna Più Ankle Boots online on YOOX United Kingdom - 11501451WQ , Eliana Bucci Ankle Boot - Women Eliana Bucci Ankle Boots online on YOOX United Kingdom - 11533069FJ , Dolce & Gabbana Loafers - Women Dolce & Gabbana Loafers online on YOOX United Kingdom - 11463527EQ , adidas Performance PREDATOR TANGO 18.4 SALA - Indoor football boots - clear orange/core blackKenneth Cole New York Kam StripesLV 44895 ZAPATO CONFORT DE MUJER , BRUNATE 60122 ZAPATO DE SALóN PARA MUJERPERLATO Classic ankle boots Colour: noir , man/woman Kenneth Cole New York Margaux Heels Most practicalAdidas DKNY COLEY - High-top trainers - white , man/woman Sanita Laylah Koi Lite Loafers Maintenance capability , Adidas Royal RepubliQ TOWN JODHPUR - Classic ankle boots - bordeauxmens/womens Columbia Caprizee Slide II Nubuck Sandals Cheaper than the priceInk Loafers - Women Ink Loafers online on YOOX United Kingdom - 11473851LB , Ras Loafers - Women Ras Loafers online on YOOX United Kingdom - 11506448IFA.Testoni Boots - Women A.Testoni Boots online on YOOX United Kingdom - 11548577AIMally Boots - Women Mally Boots online on YOOX United Kingdom - 11474201TL , Moma Ankle Boot - Women Moma Ankle Boots online on YOOX United Kingdom - 11502407UB , Giuseppe Zanotti Court - Women Giuseppe Zanotti Courts online on YOOX United Kingdom - 11395236FBAlaïa Ankle Boot - Women Alaïa Ankle Boots online on YOOX United Kingdom - 11503177JI , Sergio Rossi Court - Women Sergio Rossi Courts online on YOOX United Kingdom - 11548699SGAmj5SMnO eleventy Mix Media Hiker Boot , VdWePewV Florsheim Estabrook Cap Toe BootModern and elegant fashion The FLEXX People Mover , Special purchase Frye Riley Woven SlideDifferent styles and styles Gold & Gravy Street , Great variety Hush Puppies VentureWOMENS Christian Louboutin Red Jonatina Sandals Orders are welcome
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.