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.Rodolphe Menudier Ankle Boot - Women Rodolphe Menudier Ankle Boots online on YOOX United Kingdom - 11515941QCVic Matiē Ankle Boot - Women Vic Matiē Ankle Boots online on YOOX United Kingdom - 11279262CUStella Sofia Loafers - Women Stella Sofia Loafers online on YOOX United Kingdom - 11177169PW , Janet Sport Sneakers - Women Janet Sport Sneakers online on YOOX United Kingdom - 11507474RMMassimo Matteo 5-Eye Chukka Cap BootFlorsheim Postino Moc Toe Penny Loaferladies Patent Black Pumps Beautiful artladies Salvatore Ferragamo Butter Sandals promotion , PUMA x ADER ERROR Platform Trace Women's Sneakers | Lapis Blue | PUMA Lows | PUMA United Statesladies Manolo Blahnik Red/Beige . Sandals a good reputation in the world , lady Creative Recreation Cream Wcr22711 Platforms Many varieties , Men/Women Dr. Scholl's Gossip Flats Long-term reputation , Gizeh flip flops , black, BirkenstockPuma TSUGI CAGE - Trainers - puma blackmen's/women's Chaco Z/Cloud X2 Remix Sandals Modern design , Adidas Be Natural Ankle boots - cognacTed Baker | Ted Baker Peair derby shoes in black leather , Giuseppe Zanotti Sandals - Men Giuseppe Zanotti Sandals online on YOOX United Kingdom - 11517839FGRuco Line Sneakers - Women Ruco Line Sneakers online on YOOX United Kingdom - 11496763MI , Guess Flip Flops - Women Guess Flip Flops online on YOOX United Kingdom - 11519675UX , Aquazzura Ankle Boot - Women Aquazzura Ankle Boots online on YOOX United Kingdom - 11279058UNAlaïa Ankle Boot - Women Alaïa Ankle Boots online on YOOX United Kingdom - 11500026GLStuart Weitzman Sandals - Women Stuart Weitzman Sandals online on YOOX United Kingdom - 11472171WWLatest styles Hi-Tec Skamania Low WaterproofMost practical Etro Mesh Sandal , New market Sam Edelman TatianaBalenciaga White New Leather Sneakers Eu 46 Mens SneakersWOMENS Isabel Marant Black Ooo Pumps Price reduction , WOMEN Silver Sandals Formal Shoes Large selectionLadies Gold Glitter Wedges Complete specification area
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.