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.Anya Hindmarch Ballet Flats - Women Anya Hindmarch Ballet Flats online on YOOX United Kingdom - 11497601XC , Simone Castelletti Sandals - Women Simone Castelletti Sandals online on YOOX United Kingdom - 11464460RIDior White/Blue/Yellow Beaded Fusion Trainers SneakersL' Autre Chose Ankle Boot - Women L' Autre Chose Ankle Boots online on YOOX United Kingdom - 11249797TQ , Dolce & Gabbana Flip Flops - Women Dolce & Gabbana Flip Flops online on YOOX United Kingdom - 11196251RT , New Balance 420 Butterfly - Sneakers - Women New Balance Sneakers online on YOOX United Kingdom - 44991552AC , Gentle Souls by Kenneth Cole Neptune Chelsea 2 , PONS QUINTANA 6149 ZAPATO DE CU?A PARA MUJERTHIERRY RABOTIN 8400k ZAPATO CONFORT DE MUJERMARIA BARCELO M8011200-cr WEDGE-HEEL SANDALS FOR WOMEN , Frank Wright FALK - Classic ankle boots , BOBS from SKECHERS Chill Luxe - Sunset Cruise , mens/womens Naturalizer Cailla Heels renewed on timeCrocs BOTANICAL - Pool sliders , Adidas Pier One Slip-ons - rose gold , Pantanetti Boots - Men Pantanetti Boots online on YOOX United Kingdom - 11511958TRmens/womens IZOD Image Oxfords A balance between toughness and hardnessElia Maurizi Sandals - Men Elia Maurizi Sandals online on YOOX United Kingdom - 11577130AJCasadei Sneakers - Women Casadei Sneakers online on YOOX United Kingdom - 11090622NJ , Schutz Sandals - Women Schutz Sandals online on YOOX United Kingdom - 11524373UJ , Y-3 Sneakers - Women Y-3 Sneakers online on YOOX United Kingdom - 11460360TN , Tod's Sandals - Women Tod's Sandals online on YOOX United Kingdom - 11436282TOKeys Ankle Boot - Women Keys Ankle Boots online on YOOX United Kingdom - 11551404VD , Affordable Eileen Fisher Willow 3Win highly appreciated womens Black/Chili Sneakers Stylish , WOMENS Paprika Earth Tones Wedges High quality and cheap , Women's Tory Burch Black Jackie Platforms in short supply , woman Burberry Price Reduced Plaid Wedges newcomer , womens Stuart Weitzman Tan “alex” Wedges Cheapwoman Rene Caovilla Brown Jeweled Sandals Cheapest
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.