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.Charlotte Olympia Flip Flops - Women Charlotte Olympia Flip Flops online on YOOX United Kingdom - 11431734OE , Cafènoir Ankle Boot - Women Cafènoir Ankle Boots online on YOOX United Kingdom - 11467808PI , WOMEN Chloé Brown Python Sandals CharacteristictMJTT4sD Men/Women ALDO Antella Boots cheaper , Fierce Rope Satin En Pointe Women's Sneakers | Puma Black , REFRESH 61784 Ant. Nude WEDGE-HEEL SANDALS FOR WOMENMEPHISTO Tomasia ZAPATO DE CU?A PARA MUJER , mens/womens Frances Valentine Iris Sandals Elegant style , Adidas H?gl Over-the-knee boots - blackUnder Armour UA Tropicflo LTH T , Vans AUTHENTIC - Trainers - enamel blue/true white , Birkenstock STALON MEN - Classic ankle boots - mocha , Vans SK8 MID REISSUE GHILL - Skate shoes , men's/women's Marc Fisher Doreny Heels Attractive and durable , Be Mine MAE - High heeled sandalsSantoni Sneakers - Women Santoni Sneakers online on YOOX United Kingdom - 11539209IC , Paura Sneakers - Men Paura Sneakers online on YOOX United Kingdom - 11475733KE , Geox Sneakers - Men Geox Sneakers online on YOOX United Kingdom - 11323677XX , Mammut ALNASCA PRO MID GTX MEN - Walking boots - graphite/cloud , Giuseppe Zanotti Sneakers - Women Giuseppe Zanotti Sneakers online on YOOX United Kingdom - 11544670RF , Cristina Millotti Court - Women Cristina Millotti Courts online on YOOX United Kingdom - 11457979FB , Stuart Weitzman Boots - Women Stuart Weitzman Boots online on YOOX United Kingdom - 11568779GQVagabond Shoemakers Boots - Women Vagabond Shoemakers Boots online on YOOX United Kingdom - 11124099EPLotto Leggenda Sneakers - Men Lotto Leggenda Sneakers online on YOOX United Kingdom - 11558824ST , Prada Ghiaia 3t5909 Scamosciato Winter SneakersK. Jacques Silver Snakeskin Platform Sandalswomen New Balance Sneakers Latest technologysell Naot Kayla - WideVery good color Clarks Un Abode Form , womens Christian Louboutin Red Zipper Sandals Good quality
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.