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.Rogue Matilda Ankle Boot - Women Rogue Matilda Ankle Boots online on YOOX United Kingdom - 11500064FB , adidas Black New Tubular Shadow Sneakers , Miu Miu Pink with Sparkles Sneakers , Liu •Jo Man Sneakers - Men Liu •Jo Man Sneakers online on YOOX United Kingdom - 11305051HI , Opening Ceremony Cici Satin Slip-On Shoes - Sneakers - Women Opening Ceremony Sneakers online on YOOX United Kingdom - 11336217RJ , lady Christian Louboutin Turquoise Platforms Big sale , men/women Nine West Mydebut Heels Exquisite processingNo Name NITRO JOGGER - TrainersCalvin Klein Jeans PHILIPPA - Welliesmen's/women's Seychelles Betrayal Heels New stylemen/women Sam Edelman Willow Heels Promotionmen's/women's Clarks Acina Chester Heels modern , man/woman Trask Bradley Perf Loafers negotiationMassimo Dutti Trainers - greyMen/Women Walking Cradles Tristan Extra Wide Boots Low priceAdidas HUGO HELLIA - Classic heels - blackTommy Hilfiger MIRROR METAL FLATFORM - Trainers Colour: gold , Docksteps Boots - Men Docksteps Boots online on YOOX United Kingdom - 11538084NVNike Performance AIR MAX SEQUENT 4 - Neutral running shoes - black/anthraciteBottega Marchigiana Sneakers - Men Bottega Marchigiana Sneakers online on YOOX United Kingdom - 11542305CJ , Men/Women New Balance WX811 Sneakers & Athletic New Balance Win the praise of customersRuco Line Sneakers - Women Ruco Line Sneakers online on YOOX United Kingdom - 11506598BRRuco Line Boots - Women Ruco Line Boots online on YOOX United Kingdom - 11219857KOLola Cruz Court - Women Lola Cruz Courts online on YOOX United Kingdom - 11472214EBHogan Ankle Boot - Women Hogan Ankle Boots online on YOOX United Kingdom - 11555935WRGold Brothers Sneakers - Men Gold Brothers Sneakers online on YOOX United Kingdom - 11498489PCMISS Cole Haan Beige Wedges diversityLadies Miu Miu Nude Platforms uppers , Ladies Christian Louboutin Cork/Pink/Silver Slingback Platforms Strong value , ladies Marni Gold 5000007632 Sandals New market ,
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.