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.Paris Texas Ballet Flats - Women Paris Texas Ballet Flats online on YOOX United Kingdom - 11396729JR , Tory Burch Ankle Boot - Women Tory Burch Ankle Boots online on YOOX United Kingdom - 11239971JK , Dolce & Gabbana Boots - Women Dolce & Gabbana Boots online on YOOX United Kingdom - 11320539JJFornarina Sportglam Sneakers - Women Fornarina Sportglam Sneakers online on YOOX United Kingdom - 11520055AC , SOTOALTO Sanfernando WEDGE-HEEL SANDALS FOR WOMEN , Suede Classic Sport Stripes | Gray-Iron Gate- Brown | PUMA Men's Picks | PUMA United Stateswomen Christian Louboutin Purple Sparkle Pumps environmentally friendlymen/women Bernardo Santina Heels Beautiful colormen/women Born Drum Boots Preferred boutiqueGentle Souls by Kenneth Cole Iona , Adidas New Balance ML574 - Trainers - covert greenmen/women Paul Green Wisdom Flats a lot of varieties , ASOS DESIGN | ASOS DESIGN Aquarius Suede Chelsea Boots , Kennel + Schmenger TOP - Trainers Colour: silber/schwarz , Cult Sneakers - Men Cult Sneakers online on YOOX United Kingdom - 11475768TFmen/women Cole Haan Somerset Venetian II Loafers Modern and stylish fashion , Bruno Bordese Boots - Men Bruno Bordese Boots online on YOOX United Kingdom - 11496765DX , Keys Sneakers - Women Keys Sneakers online on YOOX United Kingdom - 11551558KB , Casadei Court - Women Casadei Courts online on YOOX United Kingdom - 11543970MHPollini Sneakers - Women Pollini Sneakers online on YOOX United Kingdom - 11569970NH , Gaimo Espadrilles - Women Gaimo Espadrilles online on YOOX United Kingdom - 11112429NR , Schutz Ankle Boot - Women Schutz Ankle Boots online on YOOX United Kingdom - 11481889QI , Manas Ankle Boot - Women Manas Ankle Boots online on YOOX United Kingdom - 11512997FOLenora Ballet Flats - Women Lenora Ballet Flats online on YOOX United Kingdom - 11367809XWEmanuela Passeri Court - Women Emanuela Passeri Courts online on YOOX United Kingdom - 11331791NJrei7nP2g Cole Haan Laree Stretch Bootie , Versace Black Medusa Lambskin Leather High Top Gold Detail 39.5 Sneakers , Superga Silver 2095 Metallic Studded Punk Fashion Sneakers Eu41 New SneakersMISS Giuseppe Zanotti Tan/ Brown Sandals Strong heat and wear resistance , WOMENS Christian Louboutin Pearl Platforms Has a long reputation ,
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.