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.Giorgio Fabiani Ankle Boot - Women Giorgio Fabiani Ankle Boots online on YOOX United Kingdom - 11468687SW , L' Autre Chose Sandals - Women L' Autre Chose Sandals online on YOOX United Kingdom - 11124575QQSusana Traca Sandals - Women Susana Traca Sandals online on YOOX United Kingdom - 11283813MC , Schutz Ballet Flats - Women Schutz Ballet Flats online on YOOX United Kingdom - 11515046KF , STATUS A296peg FASHION LOAFERS FOR WOMENMr. & Mrs. College Loafers - Women Mr. & Mrs. College Loafers online on YOOX United Kingdom - 11542003RT , Leonardo Principi Ankle Boot - Women Leonardo Principi Ankle Boots online on YOOX United Kingdom - 11247466IDwoman Stuart Weitzman Silver Oval Sandals New varieties are introduced , THIERRY RABOTIN 5202 M FASHION BALLERINAS FOR WOMEN , women Saint Laurent Brown Yvest Sandals Hot sale , Ladies Sperry Multicolor Top Sider Wedges diversity , Adidas Puma VIKKY PLATFORM - Trainers - silver/whiteAdidas Weekend Platform boots - cathay chianti , Adidas KIOMI High heeled boots - neroReebok Sneakers - Men Reebok Sneakers online on YOOX United Kingdom - 11585643QW , P448 Sneakers - Men P448 Sneakers online on YOOX United Kingdom - 11457237GO , Cappelletti Sneakers - Men Cappelletti Sneakers online on YOOX United Kingdom - 11387909RWmens/womens Converse One Star? Pinstripe Ox Sneakers & Athletic Converse First batch of customers , Wexford Loafers - Women Wexford Loafers online on YOOX United Kingdom - 11515307PTMarian Court - Women Marian Courts online on YOOX United Kingdom - 11563831LC , Womsh Sneakers - Women Womsh Sneakers online on YOOX United Kingdom - 11508666HA , Carrano Court - Women Carrano Courts online on YOOX United Kingdom - 11335636PO , Gianfranco Lattanzi Sneakers - Women Gianfranco Lattanzi Sneakers online on YOOX United Kingdom - 11547250JQ , Loretta Pettinari Sandals - Women Loretta Pettinari Sandals online on YOOX United Kingdom - 11386529KNValentino Garavani Boots - Women Valentino Garavani Boots online on YOOX United Kingdom - 11482068QC , durability Frye Melissa Deco Chelsea , Born Eton Enjoy the season in style with the stylish Elton ankle boot from BornChristian Louboutin Burgundy Gondolastrass Bordeaux Gold Strass Sneaker Trainer SneakersRebecca Minkoff "Hayden" - Black Leather Flat Fisherman SandalsWOMEN Rampage Red Wedges Complete specification area
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.