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.Laurence Dacade Ankle Boot - Women Laurence Dacade Ankle Boots online on YOOX United Kingdom - 11212134FL , See By Chloé Sandals - Women See By Chloé Sandals online on YOOX United Kingdom - 11435808ELStiù Ankle Boot - Women Stiù Ankle Boots online on YOOX United Kingdom - 11461420FOFRANK 19220 FASHION SANDALS FOR WOMENLadies Tibi Beige Sandals Excellent featuresNew Balance Fresh Foam Zante - Sneakers - Women New Balance Sneakers online on YOOX United Kingdom - 44908173PI , Twin-Set Simona Barbieri Ballet Flats - Women Twin-Set Simona Barbieri Ballet Flats online on YOOX United Kingdom - 11486623EJPellettieri Di Parma Loafers - Men Pellettieri Di Parma Loafers online on YOOX United Kingdom - 11378650MUwoman Charlotte Olympia Black Gladys Boots/Booties Quality and quantity guaranteedwoman Tory Burch Cream 51138205 Sandals Most practicalDiane von Furstenberg Gold Love Knot Sandalsmen's/women's Eric Michael Millie Heels online salemens/womens ECCO Aurora Hybrid Tie Oxfords wholesale , Kenneth Cole New York Filter Itadidas Originals JEANS - Trainers Colour: footwear white/collegiate green/core brown , New Look FINSTER MID TRAINER - High-top trainers , men/women Brogues , burgundy, Tamaris Shoes Reliable performancemen/women Tommy Hilfiger Rosee 45-X Sandals Beautiful appearance , Casadei Sneakers - Women Casadei Sneakers online on YOOX United Kingdom - 11201638HQ , Trussardi Boots - Men Trussardi Boots online on YOOX United Kingdom - 11407322TL , Primabase Sneakers - Men Primabase Sneakers online on YOOX United Kingdom - 11534369CJ , Shoe The Bear GORE - Classic ankle boots - washed pinkN° 21 Sneakers - Men N° 21 Sneakers online on YOOX United Kingdom - 11521585UK , Geox Sneakers - Women Geox Sneakers online on YOOX United Kingdom - 11577258EI , Stuart Weitzman Court - Women Stuart Weitzman Courts online on YOOX United Kingdom - 11537872MG , Cole Haan Pink Alisa Oxford Sneakers , Beautiful appearance Propet Ridge Walker Low , Amoy ECCO Melbourne Wingtip Tie , Cordani Richie Comfort, style, easy elegance. Have it all in the Cordani Richie platform wedge , WOMEN Tahari Tan Sandals Win highly appreciated
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.