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.Jimmy Choo Ankle Boot - Women Jimmy Choo Ankle Boots online on YOOX United Kingdom - 11522802CI , Mangano Ankle Boot - Women Mangano Ankle Boots online on YOOX United Kingdom - 11452259RIRose's Roses Court - Women Rose's Roses Courts online on YOOX United Kingdom - 11498231HHSaint-Honoré Paris Souliers Ballet Flats - Women Saint-Honoré Paris Souliers Ballet Flats online on YOOX United Kingdom - 11169451OKEmanuela Caruso Capri Flip Flops - Women Emanuela Caruso Capri Flip Flops online on YOOX United Kingdom - 11404471MUNike White and Silver with Cheetah Print Air Max Thea SneakersLadies Kooba Tan / Sandals Platforms Guarantee quality and quantity , adidas Glitch Camo Oreo Nmd Xr1 Sneakers , man/woman Pelle Moda Isabel Heels Fine wild , mens/womens Isola Giana Heels Good world reputation , mens/womens Schutz Ditte Boots classic style , man/woman Dorothy Perkins Ballet pumps Outstanding function , Men/Women Roxy SLIPPY - Mules uniqueMen/Women Katy Perry The Villan Heels Perfect processing , Oasis | Oasis heeled chelsea boots in black , Spaziomoda Boots - Women Spaziomoda Boots online on YOOX United Kingdom - 11448280QN , Hogan Sneakers - Men Hogan Sneakers online on YOOX United Kingdom - 11559274SH , Guess Sandals - Women Guess Sandals online on YOOX United Kingdom - 11521673RDDondup Sneakers - Women Dondup Sneakers online on YOOX United Kingdom - 11480167MBPaloma Barceló Loafers - Women Paloma Barceló Loafers online on YOOX United Kingdom - 11516837PVManuel Barceló Sneakers - Women Manuel Barceló Sneakers online on YOOX United Kingdom - 11538874KWXti Ankle Boot - Women Xti Ankle Boots online on YOOX United Kingdom - 11547980UMSalvatore Ferragamo Black Bow Slides Sandals , woman REPORT Langston Wedges clearance saleladies Nike Khaki Canvas Sneakers FreeQuality queen Taryn Rose Reese , Good world reputation Lucky Brand Mason , Born Avoca The Brn Avoca clog brings the comfort and all-around styleQUw25vuk women Navy Sneakers Sneakers High-qualitylady Franco Sarto Black Sandals Wedges Germany
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.