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.Flavio Creation Ankle Boot - Women Flavio Creation Ankle Boots online on YOOX United Kingdom - 11553036QL , The Last Conspiracy Sandals - Men The Last Conspiracy Sandals online on YOOX United Kingdom - 11533107HMDolce & Gabbana Espadrilles - Men Dolce & Gabbana Espadrilles online on YOOX United Kingdom - 11159908DM , womens Marc Jacobs Strappy Sandals Unique , TSUGI Jun Baroque Sneakers | Fig-Shadow Purple-Puma Black | PUMA Lows | PUMA United Stateswomen Manolo Blahnik Gold Floral Sandals uppers , Shoe The Bear ENZO - Cowboy/Biker boots , Men/Women Billabong Tinsley Sandals renewed on timeOne star leather trainers , khaki, Converse , man/woman Nike LunarSolo Sneakers & Athletic Nike Special purchaseAdidas Pura Lopez High heeled sandals - redCult Sneakers - Men Cult Sneakers online on YOOX United Kingdom - 11367344UMMaison Margiela Sneakers - Men Maison Margiela Sneakers online on YOOX United Kingdom - 11470864WI , Sebastian Court - Women Sebastian Courts online on YOOX United Kingdom - 11445737WF , Cafènoir Court - Women Cafènoir Courts online on YOOX United Kingdom - 11560762OOHogan Sneakers - Women Hogan Sneakers online on YOOX United Kingdom - 11577719OOSantoni Court - Women Santoni Courts online on YOOX United Kingdom - 11387306BAPura López Court - Women Pura López Courts online on YOOX United Kingdom - 11521209WV , Tory Burch Royal Tan Thora SandalsMISS Prada Nude Linea Wedges Queensland , LLNrIGHx WOMEN Prada Camel Platforms auctionwfvZoYLI ladies Camo Sneakers Average coststhe most economical adidas Outdoor Terrex Speedreliable quality Josef Seibel Carole , Preferred material Vasque Monolith UltraDryNaot Peyton The Peyton sandal is from the Naot Elegant Collection, which runs as a narrow to medium width.Nina Silana Take your look up a notch or two with these gorgeous Nina Silana pumpsStuart Weitzman Green Yellow Orange Clear Heels Kitten Heels Slip Ons Polka Dots Sandals , LADY Robert Clergerie Bronze Platforms Modern and stylish fashionMISS Stella McCartney Brown Elyse Platforms Online sales ,
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.