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.Marc Ellis Ankle Boot - Women Marc Ellis Ankle Boots online on YOOX United Kingdom - 11455808FD , Polly Plume Ankle Boot - Women Polly Plume Ankle Boots online on YOOX United Kingdom - 11459905PU , Puma Suede Bow Valentine - Sneakers - Women Puma Sneakers online on YOOX United Kingdom - 11457424HCKenzo Bottes Main - Boots - Men Kenzo Boots online on YOOX United Kingdom - 11545199VJ , Women's Jeffrey Campbell Brown Platforms UniqueWomen's Badgley Mischka Navy Formal Shoes Easyladies Orange and Tan Platforms Great classification , LADY Matt Bernson Blush Gladiator Sandals tenderLurex autoclave trainers , silver grey, VictoriaD amalitha f sandals , grey, GeoxPeter Kaiser ESRA - Classic heelsNew Balance Zante v3 - Breathe Packmen/women Trotters Mickey Heels best seller , men/women Bandolino Belluna Boots Most practicalAdidas Clarks LINVALE JERICA - Classic heels - navy , Adidas San Marina AGUJA - High heels - petroleAdidas Converse STAR PLAYER - Trainers - green/white , Supra STACKS II - Trainers - black , Kenneth Cole New York COLVIN - High-top trainers - blackGrandinetti Sneakers - Women Grandinetti Sneakers online on YOOX United Kingdom - 11462608ROCasadei Sandals - Women Casadei Sandals online on YOOX United Kingdom - 11453184BR , Grandinetti Sandals - Women Grandinetti Sandals online on YOOX United Kingdom - 11460761HQTod's Loafers - Women Tod's Loafers online on YOOX United Kingdom - 11557994KC , Tibi Ankle Boot - Women Tibi Ankle Boots online on YOOX United Kingdom - 11455152OEVic Matiē Sandals - Women Vic Matiē Sandals online on YOOX United Kingdom - 11431164AEVicini Open-Toe Mules - Women Vicini Open-Toe Mules online on YOOX United Kingdom - 11519147FGChiara Ferragni Espadrilles - Women Chiara Ferragni Espadrilles online on YOOX United Kingdom - 11339718GKThe Editor Loafers - Men The Editor Loafers online on YOOX United Kingdom - 11561400XEP7CWLNtG CALLAGHAN 17000.1 ZAPATILLA CON PLATAFORMA , Women's Vince Camuto Cream Paden Platforms New products in 2363
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.