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.Roberto Festa Ankle Boot - Women Roberto Festa Ankle Boots online on YOOX United Kingdom - 11491967TQ , Salvatore Ferragamo Ankle Boot - Women Salvatore Ferragamo Ankle Boots online on YOOX United Kingdom - 11557075WIJil Sander Ankle Boot - Women Jil Sander Ankle Boots online on YOOX United Kingdom - 11330343JU , Etro Ballet Flats - Women Etro Ballet Flats online on YOOX United Kingdom - 11286735PRWOMENS Chelsea Crew Sandals Pleasant feelingEcco X The Last Conspiracy Sneakers - Men Ecco X The Last Conspiracy Sneakers online on YOOX United Kingdom - 11259242EIMARIA MARE 61410 C29243 Caramelo FASHION FOOTWEAR FOR WOMEN , IBIZA BEACH 5736 Azul FASHION SANDALS FOR WOMEN , Manolo Blahnik Black Pointed Toe Kitten Heels Sandalsman/woman Naturalizer Yanni Heels The latest technologyUnisa ORTURAS - Classic ankle boots , man/woman Wolky Jewel Sandals Different styles and styles , Nike Sneakers - Men Nike Sneakers online on YOOX United Kingdom - 11504051NHCult Boots - Men Cult Boots online on YOOX United Kingdom - 11482852UMAdidas Sol Sana ASHTON BOOT - Classic ankle boots - blackNational Standard Sneakers - Men National Standard Sneakers online on YOOX United Kingdom - 11486639LF , K-SWISS BIG SHOT LIGHT 3 CARPET - Indoor tennis shoes - malibu blue/magnet/gull grayFabi Boots - Women Fabi Boots online on YOOX United Kingdom - 11537840HJVans Sneakers - Women Vans Sneakers online on YOOX United Kingdom - 11492352FW , Hogan Rebel Sneakers - Women Hogan Rebel Sneakers online on YOOX United Kingdom - 11299762PBElisabetta Franchi Court - Women Elisabetta Franchi Courts online on YOOX United Kingdom - 11244210KS , Elle Ankle Boot - Women Elle Ankle Boots online on YOOX United Kingdom - 11552255FJ , Philippe Model Sneakers - Women Philippe Model Sneakers online on YOOX United Kingdom - 11452568WAAlberto Guardiani Sneakers - Women Alberto Guardiani Sneakers online on YOOX United Kingdom - 11536443PE , Charlotte Olympia Court - Women Charlotte Olympia Courts online on YOOX United Kingdom - 11484985HE , Nike Denim Blue High Top Sneakers , JvJsON4A Ladies Givenchy Brown Wedges AffordableVery good color Romika Mokassetta 331Popular recommendation Ted Baker FanngoEasy Spirit Black Womens Twist Sneakers Sneakers ,
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.