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.Nila & Nila Boots - Women Nila & Nila Boots online on YOOX United Kingdom - 11473449UXClass Roberto Cavalli Sneakers - Men Class Roberto Cavalli Sneakers online on YOOX United Kingdom - 11563467TJAnnarita N. Sandals - Women Annarita N. Sandals online on YOOX United Kingdom - 11506527TU , MISS ALDO Multicolor Sandals International choice , 6VqTRgeQ mens/womens Trask Sullivan Loafers Queensland , MARIA MARE 67206 C41277 Negro FASHION SANDALS FOR WOMEN , GEOX U62d7f 00011 U Nebula C4064 Navy LOW-TOP TRAINERSmens/womens Sesto Meucci Nonnie Oxfords Excellent qualityman/woman Miz Mooz Danita Boots Fashion patternMen/Women Dolce Vita Bilee Flats High securitymen/women Calvin Klein Ballard Boots Many styles , men's/women's Aquatalia Lena Boots British temperamentMen/Women Frances Valentine Dizzie Heels excellent , LK Bennett NOVA - High heels Colour: black raspberryman/woman Swedish Hasbeens Greek Sandal Heels New ListingAsfvlt Sneakers - Men Asfvlt Sneakers online on YOOX United Kingdom - 11528311KTSantoni Sneakers - Men Santoni Sneakers online on YOOX United Kingdom - 11479285OHMen/Women Hunter Original Tall Rain Boots Boots Strong heat and wear resistance , Fratelli Rossetti Loafers - Men Fratelli Rossetti Loafers online on YOOX United Kingdom - 11440652SWPinko Sneakers - Women Pinko Sneakers online on YOOX United Kingdom - 11391270HIAuguste Ankle Boot - Women Auguste Ankle Boots online on YOOX United Kingdom - 11505246JD , Sciuscià Ankle Boot - Women Sciuscià Ankle Boots online on YOOX United Kingdom - 11553012TN , Crocs Ballet Flats - Women Crocs Ballet Flats online on YOOX United Kingdom - 11441595AWEliana Bucci Loafers - Women Eliana Bucci Loafers online on YOOX United Kingdom - 11532870JNVersace Jeans Sneakers - Women Versace Jeans Sneakers online on YOOX United Kingdom - 11296831WQlady Dior Nude Miss Platforms Won highly esteemed and widely trusted at home and abroad , Women's Birkenstock Black Leather Thong Sandals Professional design , Giuseppe Zanotti White Birel Leather High-top SneakersVince Black Paeyre Leather Skate Sneakers SneakersLADY Tory Burch Honey Beige Wedges newcomer ,
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.