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.Lea Foscati Ankle Boot - Women Lea Foscati Ankle Boots online on YOOX United Kingdom - 11495841OL , Elena Iachi Ankle Boot - Women Elena Iachi Ankle Boots online on YOOX United Kingdom - 11176638GM , 67 Sixtyseven Ankle Boot - Women 67 Sixtyseven Ankle Boots online on YOOX United Kingdom - 11541475EU , Giancarlo Paoli Court - Women Giancarlo Paoli Courts online on YOOX United Kingdom - 11487704JX , Christian Louboutin Black Louis Flat Strass Swarovski High Sneakers Sneakers , Vans Ua Old Skool (Lurex Glitter) - Sneakers - Women Vans Sneakers online on YOOX United Kingdom - 11551839ORNew Balance 574 Rose Gold - Sneakers - Women New Balance Sneakers online on YOOX United Kingdom - 11497548GOSaint-Honoré Paris Souliers Ankle Boot - Women Saint-Honoré Paris Souliers Ankle Boots online on YOOX United Kingdom - 11326667WHRed / Cream Dunk Low Pro Sb ( SneakersWomen's J.Crew Silver F1336 Sandals Latest technologymen/women Earth Gemma Flats Good world reputationmens/womens bernie mev. TW108 Loafers Aesthetic appearancemen's/women's Naot Zinnia Heels Clever and practicalmen's/women's Cole Haan Fenley High Sandal Heels Reasonable pricemens/womens SOLE Active Thick Insoles & Accessories various kindsmen/women Chinese Laundry Charisma Boot Boots Stylish and fun , Men/Women Steve Madden Draya Boots Orders are welcomeMen/Women Louise et Cie Zanda Boots online saleOnitsuka Tiger CORSAIR - Trainers - white/blackPeter Kaiser Wide Fit WIDE FIT TELSE - Classic heels , Roberto Botticelli Loafers - Men Roberto Botticelli Loafers online on YOOX United Kingdom - 11554451CDCarmine Marfé Boots - Men Carmine Marfé Boots online on YOOX United Kingdom - 11532758NC , Belstaff Ankle Boot - Women Belstaff Ankle Boots online on YOOX United Kingdom - 11503010FR , Bams Ankle Boot - Women Bams Ankle Boots online on YOOX United Kingdom - 11244104EX , Hogan Rebel Sneakers - Women Hogan Rebel Sneakers online on YOOX United Kingdom - 11299762PB , NtW1cXM4 Hoka One One Clifton 4Schutz Aimê Day or night, uptown or down, break out your favorite dress or jeans for the Schutz Aimé heeled sandalCOMME des GARÇONS x Nike White Pink Air Max Sneakers , MISS Tory Burch Navy Classic Wedges Louis, in detail , ladies Giuseppe Zanotti Gold Gladiator Sandals Full specification
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.