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.Daniele Ancarani Court - Women Daniele Ancarani Courts online on YOOX United Kingdom - 11518884XB , LADY Prada Off-white Sandals High quality , woman Prada Black Wedges Sandals Comfortlady Christian Louboutin B Pumps newcomerPuro Individual Secret Ankle Boot - Women Puro Individual Secret Ankle Boots online on YOOX United Kingdom - 11502984RQ , CALIFERS Sandalias Plataforma Mujer Piel Ja653o94-rojo WEDGE-HEEL SANDALS FOR WOMEN , Women's Tory Burch Tan Yardley Pumps Various current designsMISS Nine West Black Krysten Sandals Modern technology , WOMEN Enzo Angiolini Grey . Sandals Large selection , Puma RS 0 REINVENTION - Trainers Colour: white/grayviolet/biscaygreenmens/womens Soft Style Dalyne Heels Fine workmanship , mens/womens Badgley Mischka Teri Heels New style , men's/women's Dolce Vita Rayne Heels Good marketMen/Women Bella-Vita Kimmy Heels Outstanding stylemens/womens SoftWalk Biloxi Wide Calf Boots Sales Italy , A.Testoni Sneakers - Men A.Testoni Sneakers online on YOOX United Kingdom - 11544014JQBruno Bordese Sandals - Men Bruno Bordese Sandals online on YOOX United Kingdom - 11427932AX , Henderson Loafers - Women Henderson Loafers online on YOOX United Kingdom - 11454619QF , Pony Sneakers - Women Pony Sneakers online on YOOX United Kingdom - 11496438SXTown Sandals - Women Town Sandals online on YOOX United Kingdom - 11314261AA , Studio Pollini Court - Women Studio Pollini Courts online on YOOX United Kingdom - 11533257CKChie Mihara Sandals - Women Chie Mihara Sandals online on YOOX United Kingdom - 11400631KHSilvano Sassetti Loafers - Men Silvano Sassetti Loafers online on YOOX United Kingdom - 11239741SJElegant and robust menu L.K. Bennett Sersha Wide , Alegria Joleen The Joleen is just what you're looking for, for a cozy and casual dayIsabel Marant Black Etoile Suede Bluebel Hidden Platform Sneakers 37 Sneakers , Prada Nero Double Sport Patent Sole Thong Flip Flop Sandals , woman Ivanka Trump Etta Espadrilles Wedges High quality and cheapTory Burch Royal Navy Gemini Link New Ankle-strap Sandals , Women's Fendi Black 'fendista' Pumps Platforms Popular tide shoes
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.