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.Tosca Blu Shoes Court - Women Tosca Blu Shoes Courts online on YOOX United Kingdom - 11256096OP , Stella Luna Ankle Boot - Women Stella Luna Ankle Boots online on YOOX United Kingdom - 11544145IK , Dolce & Gabbana Boots - Women Dolce & Gabbana Boots online on YOOX United Kingdom - 11488405KLDolce & Gabbana Court - Women Dolce & Gabbana Courts online on YOOX United Kingdom - 11509920UJ , Just Cavalli Sandals - Women Just Cavalli Sandals online on YOOX United Kingdom - 11098876KURELAXSHOE 267-86 BOTíN PLANO DE MUJERMBT White Chapa Walking Sneakers SneakersTipe E Tacchi Loafers - Women Tipe E Tacchi Loafers online on YOOX United Kingdom - 11239743JOwomens Black Women's Leather Crisscross Sandals Modern and stylish fashion , adidas White with Black Lines Superstar SneakersLADY Hervé Leger Taupe Omari Platforms Elegantmen's/women's Easy Spirit Noal Sandals Moderate costman/woman Mezlan Cortino Oxfords Elegant shape , RAID Wide Fit ABREE - High heeled sandals , Fendi Sandals - Women Fendi Sandals online on YOOX United Kingdom - 11246292QU , Reebok Sneakers - Men Reebok Sneakers online on YOOX United Kingdom - 11514802II , Leonardo Principi Loafers - Men Leonardo Principi Loafers online on YOOX United Kingdom - 11448101PS , Cafènoir Court - Women Cafènoir Courts online on YOOX United Kingdom - 11266403HRStele Sneakers - Women Stele Sneakers online on YOOX United Kingdom - 11375425UBPhilippe Model Sneakers - Women Philippe Model Sneakers online on YOOX United Kingdom - 11477530WI , Chiara Ferragni Loafers - Women Chiara Ferragni Loafers online on YOOX United Kingdom - 11552348RQLe Silla Sandals - Women Le Silla Sandals online on YOOX United Kingdom - 11500359HE , Lanvin Open-Toe Mules - Women Lanvin Open-Toe Mules online on YOOX United Kingdom - 11288485AE , Isabel Marant Olive Jaeryn Suede SandalsiFcbWFAs Sol Sana April II SlideOnline export store Jewel Badgley Mischka TannerLADY Miu Miu Blue Vernice Pumps First group of customers , Christian Louboutin Black Gold Silver New Rurabubble 70 SandalsLadies Burberry Black Reyard B-medium Wedges quality Queen , Hermès Logo Leather Wood Camel Color Sandals ,
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.