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.Dieppa Restrepo Ankle Boot - Women Dieppa Restrepo Ankle Boots online on YOOX United Kingdom - 11514543AHNicole Bonnet Paris Court - Women Nicole Bonnet Paris Courts online on YOOX United Kingdom - 11467283ENNqlOp49T men/women Vince Daria Loafers Trendy , Nike Air Max Thea Ultra Flyknit - Sneakers - Women Nike Sneakers online on YOOX United Kingdom - 11222837DB , Manufacture D'essai Ankle Boot - Women Manufacture D'essai Ankle Boots online on YOOX United Kingdom - 11504046XSlady Talbots Black Stilettos Formal Shoes price concessions , LADY Chinese Laundry Tan Cav-009 Wedges Superior qualityGiuseppe Zanotti Burgundy Black Gold Unknown SneakersNike Blue-chambray Blue/White-skyline Air Rift Basic Sneakers , woman Dolce&Gabbana Gold Brocatto/Ayers Sandals Good qualitymen/women Lucky Brand Jewelia Heels Great choice , SPM NOLITA - High heeled bootsmens/womens Steve Madden Kyma Boots wholesaleMen/Women Loeffler Randall Gabi Sandals wonderfulBullboxer High-top trainers Colour: dark brown , Adidas Pepe Jeans KOKO SAND - Trainers - black , man/woman Madden Girl Meellie Flats New varieties are launched , mens/womens SAS Captiva Heels Don't worry when shoppingHogan Sneakers - Men Hogan Sneakers online on YOOX United Kingdom - 11559623EEmen's/women's adidas Outdoor Terrex Agravic Sneakers & Athletic adidas Outdoor Modern design , Nuova Vita Sneakers - Men Nuova Vita Sneakers online on YOOX United Kingdom - 11229089RX , Albano Sandals - Women Albano Sandals online on YOOX United Kingdom - 11167522DUHenderson Loafers - Women Henderson Loafers online on YOOX United Kingdom - 11452306TG , Saucony Sneakers - Women Saucony Sneakers online on YOOX United Kingdom - 11430647HI , U.S.Polo Assn. Sneakers - Women U.S.Polo Assn. Sneakers online on YOOX United Kingdom - 11504756DK , Elisabetta Franchi Sneakers - Women Elisabetta Franchi Sneakers online on YOOX United Kingdom - 44972087UIDaniele Ancarani Court - Women Daniele Ancarani Courts online on YOOX United Kingdom - 11053776UT , Gianvito Rossi Court - Women Gianvito Rossi Courts online on YOOX United Kingdom - 11262813VQ , women Jimmy Choo Brown 34426 Platforms Fine workmanship , women LifeStride Black Jiffy 858l03 Sandals New design ,
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.