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.Armani Jeans Ankle Boot - Women Armani Jeans Ankle Boots online on YOOX United Kingdom - 11193352REMalone Souliers Ankle Boot - Women Malone Souliers Ankle Boots online on YOOX United Kingdom - 11472522UXApepazza Ankle Boot - Women Apepazza Ankle Boots online on YOOX United Kingdom - 11467346NB , IGNITE Flash evoKNIT Men's Training Shoes | Red Dahlia-Red-White | PUMA Ignite Flash | PUMA United StatesLADY Giuseppe Zanotti White Design Sandals Elegant and robust packaging , lady Black Leather Satin Rhinestone Sandals Moderate priceBRUNATE 30852 ZAPATO DE CU?A PARA MUJER , men's/women's LifeStride LS Revolution Caught Heels comfortabilityMen/Women Jewel Badgley Mischka Taren Heels BargainSKECHERS Performance Go Walk Lite StarletAdidas Peter Kaiser DAGMARI - High heels - schwarzAdidas Victoria Shoes DEPORTIVO METALIZADO - Trainers - fucsia , Adidas ALDO PIELLA - Ankle boots - lilacAdidas Anna Field Classic ankle boots - blackman/woman Stuart Weitzman Tori Heels Year-end special promotions , Doucal's Loafers - Men Doucal's Loafers online on YOOX United Kingdom - 11391659CX , Adidas Columbia CAMDEN - Walking boots - ancient fossil grey iceBrett & Sons DANDY - Classic ankle boots Colour: cognacU.S.Polo Assn. Sneakers - Men U.S.Polo Assn. Sneakers online on YOOX United Kingdom - 11544583HOSergio Rossi Boots - Women Sergio Rossi Boots online on YOOX United Kingdom - 44814734RS , Neil Barrett Sneakers - Men Neil Barrett Sneakers online on YOOX United Kingdom - 11570226ORTory Burch Black Zoey 50mm Sandals , WOMENS Multicolor 700 Sneakers Lush design , Sufficient supply SKECHERS Breathe-Easy - FortuneknitTrask Amy Make waves in the bold and alluring Amy ankle bootie from Trask. , David Aaron Pink Lavender Sweet Kitten Heel with Bow and Cutouts New Vintage Sandals , Tory Burch Brown T Padlock Strap Leather Gold Logo SandalsPuma Black - White Women's Suede Platform Core SneakersChristian Louboutin Black Louis Orlato Flat Glitt Sneakers , MISS Marchesa Gunmetal Glitter Rose Platforms New market ,
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.