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.George J. Love Sneakers - Women George J. Love Sneakers online on YOOX United Kingdom - 11319498UJBaldinini Trend Loafers - Women Baldinini Trend Loafers online on YOOX United Kingdom - 11330669KK , Manuel Barceló Sneakers - Women Manuel Barceló Sneakers online on YOOX United Kingdom - 11511674LS , iKnMsSwE Locust sandals , black, Tamaris , Saint Laurent Blue Classic Court Metallic High Top Sneakers SneakersCUMBIA 30895 Vachetta Rosita SANDALIA BIO PARA MUJERLadies Christian Louboutin Burgundy/Red Wine Platforms luxury , men's/women's Vince Camuto Tulina Boots Moderate costmen's/women's Splendid Delroy Clogs & Mules wholesale , Zign Smart slip-ons - dark brown , Men/Women Blowfish Tickle-B Heels Caramel, gentleKappa NANOOK - High-top trainers , House of Hounds OSPREY - Smart slip-ons - blackChloé Court - Women Chloé Courts online on YOOX United Kingdom - 11520793UISpringa Sneakers - Men Springa Sneakers online on YOOX United Kingdom - 11457221QN , Premiata Boots - Men Premiata Boots online on YOOX United Kingdom - 11530928RL , Hogan Sneakers - Men Hogan Sneakers online on YOOX United Kingdom - 11289152EDMen/Women UNIONBAY Denny Sneaker Sneakers & Athletic UNIONBAY Practical and economical , Jessica Simpson JEZALYNN - High heeled sandals Colour: gilded gold shimmerGianfranco Lattanzi Boots - Men Gianfranco Lattanzi Boots online on YOOX United Kingdom - 11513057PKAdidas Originals Sneakers - Men Adidas Originals Sneakers online on YOOX United Kingdom - 11462413BQMot-Clè Loafers - Women Mot-Clè Loafers online on YOOX United Kingdom - 11523403QX , Geox Loafers - Women Geox Loafers online on YOOX United Kingdom - 11392205CX , Atos Lombardini Court - Women Atos Lombardini Courts online on YOOX United Kingdom - 11444921XW , Rebecca Minkoff Sneakers - Women Rebecca Minkoff Sneakers online on YOOX United Kingdom - 11448255XBAcne Studios Sliver Adriana Metallic Sneakers , Don't worry when shopping DC Danni SE , Seasonal promotion Vince Camuto Kolissa , Propet Eden Rev up your power walks with the Eden athletic shoe!MIA Raymond Rev up your look with these eye-catching Mia Raymond booties ,
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.