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.What For Ankle Boot - Women What For Ankle Boots online on YOOX United Kingdom - 11467989GV , Gianna Meliani Open-Toe Mules - Women Gianna Meliani Open-Toe Mules online on YOOX United Kingdom - 11570606AWChiara Ferragni Ballet Flats - Women Chiara Ferragni Ballet Flats online on YOOX United Kingdom - 11391591VILadies Steve Madden Red Kananda Sandals Qualified productionWOMEN Salvatore Ferragamo Rose Perala Sandals Order welcomeD thymar a trainers , gold-coloured, Geoxmens/womens Base London Butler Oxfords serviceSkechers Sport BOBS SQUAD - Trainers Colour: burgundy sparkleMen/Women Donald J Pliner Greece Boots Various goods , Asics Tiger LYTE-TRAINER - Trainers - peacoat , Oxitaly GIUDITA - Classic ankle boots Colour: nero , Supra Sneakers - Men Supra Sneakers online on YOOX United Kingdom - 11337367AHman/woman Finn Comfort Altea Sneakers & Athletic Finn Comfort Clever and practical , men/women Nine West Jaison 2 Boots Different styles and stylesASOS DESIGN | ASOS DESIGN Potion premium leather high heels in black suede and leopardDsquared2 Sneakers - Women Dsquared2 Sneakers online on YOOX United Kingdom - 11082273EX , Zinda Court - Women Zinda Courts online on YOOX United Kingdom - 11563159BS , Marco Barbabella Court - Women Marco Barbabella Courts online on YOOX United Kingdom - 11508798MO , Get It Loafers - Women Get It Loafers online on YOOX United Kingdom - 11437203WNLeather Crown Sneakers - Women Leather Crown Sneakers online on YOOX United Kingdom - 11282448RLGxIdAmIf Columbia Meadows Slip-On Omni-Heat 3Ddiscount price Camper Katie - K200720 , good quality Tretorn Eve 2 , As of the latest model La Canadienne Gavyn , Not so expensive Klogs Footwear AstoriaCaparros Nitza Enjoy the occasion in these lovely Caparros Nitza wedges , Women's Cole Haan Gold Slingback Sandals Clever and practicalwomens Sam Edelman Silver/White Wedges Easy to handleBirkenstock Blue Arizona In Pixel Women's Sandals , woman White Platform Sneakers Stylish and funny
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.