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.Patrizia Pepe Ankle Boot - Women Patrizia Pepe Ankle Boots online on YOOX United Kingdom - 11431911HUDolce & Gabbana Court - Women Dolce & Gabbana Courts online on YOOX United Kingdom - 11488353CJEat My Dust Sneakers - Men Eat My Dust Sneakers online on YOOX United Kingdom - 11262364WP , Cafènoir Ankle Boot - Women Cafènoir Ankle Boots online on YOOX United Kingdom - 11478488SA , Nike Blue Dunk Skyhi Essential SneakersValentino Rose Gold Rockstud Metallic Sandals , womens Trina Turk Toupe Strape Sandals Cheaper than the priceCALLAGHAN 89844 ZAPATO DE CU?A PARA MUJERman/woman Rupert Sanderson Telita Heels professional design , Men/Women Frye Natalie Combat Tall Boots TRUE , You metallic flip flops , grey, Havaianas , Geox FELICITY - Over-the-knee boots Colour: blackMen/Women J. Renee Tahira Heels King of the crowdmen/women Tamaris T-bar sandals Colour: silver discountmens/womens Nine West Austen 2 Heels Price reductionWoolrich Sneakers - Men Woolrich Sneakers online on YOOX United Kingdom - 11496539FK , Casadei Loafers - Men Casadei Loafers online on YOOX United Kingdom - 11500420FF , Pollini Boots - Men Pollini Boots online on YOOX United Kingdom - 11448533LP , Hogan Sneakers - Men Hogan Sneakers online on YOOX United Kingdom - 11540969OM , men's/women's DSQUARED2 Cambridge High Top Sneaker Sneakers & Athletic DSQUARED2 High-quality materials , Adidas Steve Madden LOVELY - High heeled ankle boots - multicolormen's/women's Sam Edelman Lear Sneakers & Athletic Sam Edelman main categorymens/womens Rockport Thurston Plain Toe Sneakers & Athletic Rockport Elegant shape1,618 Ankle Boot - Women 1,618 Ankle Boots online on YOOX United Kingdom - 11502163WRPf16 Open-Toe Mules - Women Pf16 Open-Toe Mules online on YOOX United Kingdom - 11390550WD , DpLnkwt8 SKECHERS Equalizer Coast To CoastTrask Shayla Polish your summer-look with the chic and stylish Shayla sandal by Trask®!Dolce Vita Ivory Genivee Espadrille Slide Off White M Sandals , Ladies Sam Edelman Black Suede Sandals Orders are welcome , lady Birkenstock White Mayari Sandals price concessions
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.