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.Vagabond Shoemakers Ankle Boot - Women Vagabond Shoemakers Ankle Boots online on YOOX United Kingdom - 11374667KT , Rick Owens Ankle Boot - Women Rick Owens Ankle Boots online on YOOX United Kingdom - 11326844HX , Bruno Premi Ankle Boot - Women Bruno Premi Ankle Boots online on YOOX United Kingdom - 11455741JEAnna Baiguera Ballet Flats - Women Anna Baiguera Ballet Flats online on YOOX United Kingdom - 11216778GUKaty Perry Ankle Boot - Women Katy Perry Ankle Boots online on YOOX United Kingdom - 11462732PW , Le Silla Ankle Boot - Women Le Silla Ankle Boots online on YOOX United Kingdom - 11301157SSDolce & Gabbana Sandals - Women Dolce & Gabbana Sandals online on YOOX United Kingdom - 44883771GNDonna Soft Loafers - Women Donna Soft Loafers online on YOOX United Kingdom - 11487079IBSuperga Alexa Chung - 2254 Alpinaleapatentw , Platform Slide Bold Women's Sandals | Puma White-Puma White | PUMA Summer Shop | PUMA United States , Ladies DKNY Fuchsia Wedges Different styles and styles , woman Valentino Pink Rockstud Cage Sandals Elegant appearancemens/womens Volcom Outlander Boots Not so expensiveStargazer lw trainers , grey, NikeWALK LONDON | WALK London formal monk in black leatherKennel + Schmenger RUBY - Classic ankle boots Colour: schwarz , Adidas Billi Bi Classic ankle boots - black , Adidas Tamaris High heeled sandals - white , Proenza Schouler Classic ankle boots Colour: damante curry , Santoni Loafers - Men Santoni Loafers online on YOOX United Kingdom - 11534199EFAdidas Sneakers - Men Adidas Sneakers online on YOOX United Kingdom - 11466229AGDoucal's Loafers - Men Doucal's Loafers online on YOOX United Kingdom - 11404916GL , Dsquared2 Sneakers - Men Dsquared2 Sneakers online on YOOX United Kingdom - 11298636JXmen's/women's Seychelles Tigers Eye Loafers Pick up at the boutique , Metisse Ankle Boot - Women Metisse Ankle Boots online on YOOX United Kingdom - 11458747CR , Chloé Ankle Boot - Women Chloé Ankle Boots online on YOOX United Kingdom - 11100001PA , Cole Haan Tan Maria Sharapova Sandals , Moderate cost Paul Green Simona , WOMENS Valentino Black Cork Wedge Sandals Latest technology , Women's Sam Edelman Sandal Wedges Famous store
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.