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.Ebarrito Ankle Boot - Women Ebarrito Ankle Boots online on YOOX United Kingdom - 11457239UW , Cole Haan GrandPro Tennis Handstain SneakerDolce&Gabbana Fuschia Ankle Strap Heels SandalsNew Balance 996 Suede - Mesh Bright Colors - Sneakers - Men New Balance Sneakers online on YOOX United Kingdom - 11195349XC , Nila & Nila Flip Flops - Women Nila & Nila Flip Flops online on YOOX United Kingdom - 11348599LJAir Jordan Black Men 6 Retro and White Sneakers , Brian Atwood Pink / Orange Strap Sandals , Men/Women Rocket Dog Somma Sandals New Listingman/woman Toni Pons Noelia Flats Durable service , man/woman Naot Anika Sandals Perfect processingMen/Women Dr. Scholl's Calling Heels Year-end special promotions , man/woman VOLATILE Terrence Heels High quality and economyManebí Espadrilles - Women Manebí Espadrilles online on YOOX United Kingdom - 11480487JO , Hogan Loafers - Men Hogan Loafers online on YOOX United Kingdom - 11541411EVman/woman Adidas Lucas Premiere Shoes Schuhe At a lower pricePinko Loafers - Women Pinko Loafers online on YOOX United Kingdom - 11471142MA , Dsquared2 Court - Women Dsquared2 Courts online on YOOX United Kingdom - 11301279IRGiampaolo Viozzi Boots - Women Giampaolo Viozzi Boots online on YOOX United Kingdom - 11503494HO , Ebarrito Ballet Flats - Women Ebarrito Ballet Flats online on YOOX United Kingdom - 11560014VHMarc Jacobs Sandals - Women Marc Jacobs Sandals online on YOOX United Kingdom - 11214920MHAdidas Originals Sneakers - Men Adidas Originals Sneakers online on YOOX United Kingdom - 11562239HP , classic style Sigerson Morrison AppleVince Garrett Be sexy and stylish while looking casual with these astonishing Vince Garrett SneakersDiane von Furstenberg Black Leather with Gold Design & Slides SandalsYohji Yamamoto Black - Y-3 Carbon Leather Lightweight Sneakers SneakersKaty Perry Cobalt Blue Suede with Beaded Fringe Sandals , ladies Tory Burch Royal Tan Sandals Complete specification area , Adrienne Vittadini Black with White Trim Campania SandalsWomen's Hermès White Polo Sneakers Modern designwomens Birkenstock Tan Arizona Suede Sandals auction ,
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.