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.Porta Borsari Ankle Boot - Women Porta Borsari Ankle Boots online on YOOX United Kingdom - 11547020LFA.S. 98 Ankle Boot - Women A.S. 98 Ankle Boots online on YOOX United Kingdom - 11365216AN , Tory Burch Sandals - Women Tory Burch Sandals online on YOOX United Kingdom - 11205769KN , Philosophy Di Lorenzo Serafini Court - Women Philosophy Di Lorenzo Serafini Courts online on YOOX United Kingdom - 11553586EX , Vicini Tapeet Ankle Boot - Women Vicini Tapeet Ankle Boots online on YOOX United Kingdom - 11057569VMNo. 6 Store Sandals - Women No. 6 Store Sandals online on YOOX United Kingdom - 11477778NW , Nike Navy Metallic Women's Air Max Thea Se (861674-002) In Hematite Sneakersladies Clarks Black Kyna Wise Wedges Economical and practical , WOMEN Prada Floral Patent Leather Pumps Big clearance saleNike Color Mix Fly Knit Max Sneakersmen/women Calvin Klein Abriana Sandals International choicemens/womens Lauren Lorraine Nikki Boots Packaging diversity , Superga COTU - Trainers - black , men's/women's Bettye Muller Meade Boots King of the crowd , Asics Tiger GEL MAI - Trainers - white , man/woman LAUREN Ralph Lauren Makenzie Boots Elegant shapemen's/women's Donald J Pliner Sansone Boots Fashion pattern , Adidas H?gl Classic ankle boots - black , Tod's Loafers - Women Tod's Loafers online on YOOX United Kingdom - 11543268KL , Dsquared2 Sneakers - Women Dsquared2 Sneakers online on YOOX United Kingdom - 11555794BILotto Sneakers - Men Lotto Sneakers online on YOOX United Kingdom - 11559270EIColumbia NEWTON RIDGE PLUS II WATERPROOF - Walking boots - shark/black , Adidas Reebok EVAZURE DMX LITE - Walking trainers - lilac/pink/whiteMissoni Boots - Women Missoni Boots online on YOOX United Kingdom - 11482477SQChiara Ferragni Loafers - Women Chiara Ferragni Loafers online on YOOX United Kingdom - 11549061EE , Charlotte Olympia Loafers - Women Charlotte Olympia Loafers online on YOOX United Kingdom - 11532241XI , Reliable quality English Laundry Darby , special function Corral Boots C3338 , Blowfish Granola-B Perfect your seasonal wardrobe with the classically casual Granola B sandal. , womens Giuseppe Zanotti Deep Red Platforms Complete specification area
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.