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.Pons Quintana Ankle Boot - Women Pons Quintana Ankle Boots online on YOOX United Kingdom - 11518103RLStuart Weitzman Ballet Flats - Women Stuart Weitzman Ballet Flats online on YOOX United Kingdom - 11098367XA , Alberto Fermani Ankle Boot - Women Alberto Fermani Ankle Boots online on YOOX United Kingdom - 11294646PS , Gianvito Rossi Ankle Boot - Women Gianvito Rossi Ankle Boots online on YOOX United Kingdom - 11492634GG , Twin-Set Simona Barbieri Loafers - Women Twin-Set Simona Barbieri Loafers online on YOOX United Kingdom - 11387955DK , Guess Ankle Boot - Women Guess Ankle Boots online on YOOX United Kingdom - 11474728SD , rFwe5EYo men/women LifeStride Racey Boots ClearanceBasket Heart Ath Lux Women's Sneakers | Puma White-Puma White | PUMA Heart Collection | PUMA United States , Hummel SLIMMER STADIL HIGH Black / WhiteNike Air Max 1 Premium - Sneakers - Men Nike Sneakers online on YOOX United Kingdom - 11378028PV , womens Chie Mihara Black Formal Shoes The color is very noticeable , GARMENT PROJECT TYPE - Trainers Colour: army , man/woman Callisto of California Alinna Heels Beautiful colorHogan Sneakers - Men Hogan Sneakers online on YOOX United Kingdom - 11561824IWCorvari Loafers - Men Corvari Loafers online on YOOX United Kingdom - 11553198CJ , Adidas Nike Performance FREE TR 8 - Sports shoes - black , Saucony Sneakers - Women Saucony Sneakers online on YOOX United Kingdom - 11172607TS , J.Born Ankle Boot - Women J.Born Ankle Boots online on YOOX United Kingdom - 11536198XW , Artselab Ankle Boot - Women Artselab Ankle Boots online on YOOX United Kingdom - 11568963HJ , Keb Ankle Boot - Women Keb Ankle Boots online on YOOX United Kingdom - 11472654AF , Plenty by Tracy Reese Nice SandalsClearance sale Stacy Adams GiordanoMunro Lexi Keep a cool vibe in the low profile Lexi , Cole Haan White Air Bria Open Toe Huarache Flat Ballet Wedge B Woven Sandals , WOMENS Bucco Brown Otto Wedges Let our goods go out into the world , WOMENS Vince Camuto Steel Zen Sandals Clever and practicalwomen Hermès Brown Leather Strappy Sandals Louis, in detail , WOMEN Cole Haan Beige Caitlin Sandals Exquisite (medium) workmanshipPedro Garcia Grey Vacchetta "Eyelet" Castoro Sandalsadidas Yeezy Boost 350 V2 Sneakers ,
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.