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.Nike Mayfly Woven - Sneakers - Men Nike Sneakers online on YOOX United Kingdom - 11287553HG , Reebok Workout Plus - Sneakers - Men Reebok Sneakers online on YOOX United Kingdom - 11443359KRLiu •Jo Shoes Sneakers - Women Liu •Jo Shoes Sneakers online on YOOX United Kingdom - 11297334AV , nENtLwUz Men/Women VOLATILE Vega Sandals use , AVID Men's Sneakers | Puma Black-Puma Black | PUMA Men's Picks | PUMA United StatesPaul Green Black Gray & Cream Print Gladiator Sandals , JAIME MASCARO 47717-jaime Mascaro BOTíN PLANO DE MUJER , MEPHISTO Mar Gaux BOTíN PLANO DE MUJERIsabel Marant Black and White Bekett Sneakersladies Christopher Kane Ombre Ballet Sneakers auction , Vero Moda VMSINE - Ballet pumpsMen/Women Tommy Hilfiger Neoline Flats cheap , men's/women's Naturalizer Elliott Sandals Superb craftsmanshipSuperstar trainers , white/printed, Adidas OriginalsPARFOIS Slingback ballet pumps Colour: blushAdidas Puma BASKET HEART - Trainers - white/rose goldCortica IMPULSUM MONO - Trainers - wine , Lotto MAESTRO 700 FG - Moulded stud football boots - blu atlantic/black , Henderson Ankle Boot - Women Henderson Ankle Boots online on YOOX United Kingdom - 11454386HV , Cult Ankle Boot - Women Cult Ankle Boots online on YOOX United Kingdom - 11473829KL , Gfg Creazioni Boots - Women Gfg Creazioni Boots online on YOOX United Kingdom - 11515816GO , Marc Ellis Court - Women Marc Ellis Courts online on YOOX United Kingdom - 11524111QJJimmy Choo Sandals - Women Jimmy Choo Sandals online on YOOX United Kingdom - 11522673NWCeline Ankle Boot - Women Celine Ankle Boots online on YOOX United Kingdom - 11469132PLNot so expensive Reef Cushion Bounce VistaElegant and stable packaging Tommy Bahama Saige , Shopping promotion Mark Nason Brentwood , SKECHERS Hi-Lite Add smooth style to your repertoire with the SKECHERS Hi-Lites - Metallics shoe!Saint Laurent Pink Skullada Slip On SneakersWOMENS Zara Slingback Sandals Rich on-time delivery
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.