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.Valentino Garavani Ankle Boot - Women Valentino Garavani Ankle Boots online on YOOX United Kingdom - 11456569MX , Guido Sgariglia Ankle Boot - Women Guido Sgariglia Ankle Boots online on YOOX United Kingdom - 11091526CM , Swedish Hasbeens Zip It Shearling BootGiuseppe Zanotti White & Gold New Women Gz Genuine Leather Pyramid Detail Straps High-top Wedge Sneakers , Giuseppe Di Dato Ankle Boot - Women Giuseppe Di Dato Ankle Boots online on YOOX United Kingdom - 11552934BFLiu ?Jo Shoes Ankle Boot - Women Liu ?Jo Shoes Ankle Boots online on YOOX United Kingdom - 11315321DHmen's/women's Bianco Mules Clearance priceMen/Women Steven Shila Boots Selling new products , Adidas Gabor Wedges - new merlotmens/womens Nina Wynne Flats Excellent workmanship , mens/womens Ivanka Trump Klover4 Heels delicateGentle Souls by Kenneth Cole Gianna , U hampstead a leather brogues , black, GeoxHogan Sneakers - Women Hogan Sneakers online on YOOX United Kingdom - 11415439KOVersace Loafers - Men Versace Loafers online on YOOX United Kingdom - 11493273SQGivenchy Loafers - Men Givenchy Loafers online on YOOX United Kingdom - 11343551DV , Lacoste | Lacoste Carnaby Evo 318 6 sneakers in white with blue , Adidas Sol Sana ASHTON BOOT - Classic ankle boots - black , Fabiano Ricci Sneakers - Men Fabiano Ricci Sneakers online on YOOX United Kingdom - 11546937BE , Bally Sandals - Women Bally Sandals online on YOOX United Kingdom - 11486691NXAquarelle Sandals - Women Aquarelle Sandals online on YOOX United Kingdom - 11473375PUAlberto Venturini Boots - Women Alberto Venturini Boots online on YOOX United Kingdom - 11467930BT , Ruco Line Sneakers - Women Ruco Line Sneakers online on YOOX United Kingdom - 11469396SOHogan Ankle Boot - Women Hogan Ankle Boots online on YOOX United Kingdom - 11567883HSJimmy Choo Sandals - Women Jimmy Choo Sandals online on YOOX United Kingdom - 11478171SKStrong heat and wear resistance Reebok Work RevalClergerie Keyla Be fiercely fashionable with every footfall in Robert Clergerie. , lady Nine West Silver Straps Wedges Crazy price , WOMENS Alexander Wang Black Vika Sandals New styleDior White Walk'n'dior J'adior Low Top 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.