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.Vagabond Shoemakers Ballet Flats - Women Vagabond Shoemakers Ballet Flats online on YOOX United Kingdom - 11507104FLTwin-Set Simona Barbieri Sandals - Women Twin-Set Simona Barbieri Sandals online on YOOX United Kingdom - 11193539LCLoretta Pettinari Ankle Boot - Women Loretta Pettinari Ankle Boots online on YOOX United Kingdom - 11471838GDMaritan G Ankle Boot - Women Maritan G Ankle Boots online on YOOX United Kingdom - 11483486JS , Divine Follie Ballet Flats - Women Divine Follie Ballet Flats online on YOOX United Kingdom - 11558880LD , Armata Di Mare Sneakers - Men Armata Di Mare Sneakers online on YOOX United Kingdom - 11565443MSPedro Garcia Black T Strap Sandals , Converse ALL STAR DAINTY OX Red , N.D.C. Made By Hand Ankle Boot - Women N.D.C. Made By Hand Ankle Boots online on YOOX United Kingdom - 11390294BOThe Kooples Glossy Leather Sandals With Studs - Court - Women The Kooples Courts online on YOOX United Kingdom - 11446560TUWOMEN Dolce Vita Beige Wedges King of the quantityBradley leather ankle boots , black, CoolwayHUF WORLDWIDE SLIDE - Mules , Men/Women EuroSoft Elin Oxfords As of the latest model , men/women Jil Sander Navy JN29101 Oxfords Popular tide shoes , Gazelle stitch and turn trainers , khaki, Adidas Originalsmen/women Clarks Brielle Kae Heels Clever and practical , man/woman Adidas Women's Stan Smith Shoes Schuhe Explosive good goodsChocolà Ankle Boot - Women Chocolà Ankle Boots online on YOOX United Kingdom - 11527025SNChiara Ferragni Loafers - Women Chiara Ferragni Loafers online on YOOX United Kingdom - 11279220HM , Marco Barbabella Court - Women Marco Barbabella Courts online on YOOX United Kingdom - 11420450QRPrada Flip Flops - Women Prada Flip Flops online on YOOX United Kingdom - 11540540TQJack Rogers Black Cork Platform SandalsLADY Valentino Pink Sandals Long-term reputation , LHInaXrF Jerusalem Sandals Ariel - Womens , Stylish and charming Yellow Box Custard , Roper Nina You will love the sleek Western style of the Roper Nina boot , Calvin Klein Brown Jupare Platform Espadrille 183 Almond Tan U Sandalswomens Prada Pale Gold Formal Shoes Great classificationWOMEN Escada Purple Sandals a great variety
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.