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.Vans Ua Old Skool - Sneakers - Women Vans Sneakers online on YOOX United Kingdom - 11338472NQPeter Non Open-Toe Mules - Women Peter Non Open-Toe Mules online on YOOX United Kingdom - 11258079AE , Cross Walk Ankle Boot - Women Cross Walk Ankle Boots online on YOOX United Kingdom - 11313191SCJeffrey Campbell Sandals - Women Jeffrey Campbell Sandals online on YOOX United Kingdom - 11472671DA , No Name Sneakers - Women No Name Sneakers online on YOOX United Kingdom - 11305046GA , LOLAS S048304768mat FASHION LOAFERS FOR WOMENAVID evoKNIT DIAMOND | Black-Dk Shadow-Diamond Blue | PUMA Premium Select | PUMA United States , PITILLOS 5238-pitillos ZAPATO DE CU?A PARA MUJERwomens Olukai Coral Hoopio Sandals Large selectionVans MARVEL AUTHENTIC - Trainers Colour: multicolorPolo Ralph Lauren BURNISHED TRAIN - Trainers - black , men's/women's Tahari Lois Loafers Ideal gift for all occasionsBj?rn Borg R200 - Trainers - dark green , Wood Wood DREW SHOE - Trainers - blackmen/women Hush Puppies Finola Montie Heels high quality , man/woman Rieker D8172 Delilah 72 Boots classic style , Dsquared2 Sneakers - Men Dsquared2 Sneakers online on YOOX United Kingdom - 11368155CI , Gravati Loafers - Men Gravati Loafers online on YOOX United Kingdom - 11557772NH , Reebok Sneakers - Men Reebok Sneakers online on YOOX United Kingdom - 11551801WHReebok Sneakers - Men Reebok Sneakers online on YOOX United Kingdom - 11327501XEmens/womens ECCO Ian Casual Slip-On Loafers Known for its excellent quality , man/woman A2 by Aerosoles Handout Flats Modern and elegant fashion , Versace Collection Sneakers - Men Versace Collection Sneakers online on YOOX United Kingdom - 11463346DJJust Cavalli Loafers - Men Just Cavalli Loafers online on YOOX United Kingdom - 11472911CP , O.X.S. Sneakers - Women O.X.S. Sneakers online on YOOX United Kingdom - 11456562PU , Vans Sneakers - Women Vans Sneakers online on YOOX United Kingdom - 11492332SK , Pollini Sandals - Women Pollini Sandals online on YOOX United Kingdom - 11331653PS , Yeezy Ankle Boot - Women Yeezy Ankle Boots online on YOOX United Kingdom - 11535772RVL'f Shoes Court - Women L'f Shoes Courts online on YOOX United Kingdom - 11550091XVRich on-time delivery ASICS GEL-Quantum 180 3 ,
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.