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.Gianna Meliani Ankle Boot - Women Gianna Meliani Ankle Boots online on YOOX United Kingdom - 11059687CQTwin-Set Simona Barbieri Sneakers - Women Twin-Set Simona Barbieri Sneakers online on YOOX United Kingdom - 11561077PNDolce & Gabbana Sneakers - Women Dolce & Gabbana Sneakers online on YOOX United Kingdom - 11454764MLDuca Di Morrone Boots - Men Duca Di Morrone Boots online on YOOX United Kingdom - 11531773WA , Festa Milano Court - Women Festa Milano Courts online on YOOX United Kingdom - 11487538EHwomens Stuart Weitzman Taupe Wedges Characteristic , Ladies Sandals At a lower price , JuxpY7BS mens/womens ALDO Derrade Oxfords businessLADY Liz Claiborne Black Wedges Easy to clean surfaceman/woman Adidas Dame 4 Shoes Schuhe superior , man/woman Rocket Dog Dundee Boots business , 2730 cotu trainers , white, Supergamen's/women's Nike Davinho Sneakers & Athletic Nike Special purchase , men's/women's PARFOIS Mules Colour: black product quality , men/women Paul Green Henly Flats leading the fashionMen/Women Deer Stags Mentor Loafer Loafers Good quality , Jackal Sneakers - Men Jackal Sneakers online on YOOX United Kingdom - 11504350NE , Lumberjack Boots - Men Lumberjack Boots online on YOOX United Kingdom - 11321045MWCafènoir Boots - Men Cafènoir Boots online on YOOX United Kingdom - 11478500TG , C.Waldorf Court - Women C.Waldorf Courts online on YOOX United Kingdom - 11534148KSMarco Barbabella Boots - Women Marco Barbabella Boots online on YOOX United Kingdom - 11454417GDAtlantic Stars Sneakers - Men Atlantic Stars Sneakers online on YOOX United Kingdom - 11566432PUAir Jordan Black 13 Cat SneakersBella Vita Brown Leppard Sneaker SneakersNew market Rieker D1906 Malea 06 , ALDO Agriassa Pair these classics with trousers and a sport coat for the perfect Fall look , Blundstone BL1440 Move forward throughout your day in total confidence with the reliable durability and support of the Blundstone BL1440 boot.Valentino Black Blue Rolling Rockstud City Leather (Eu39/Us Sandals , WOMENS Tory Burch Black Blossom Sandals Buy onlineWOMENS Jimmy Choo Taupe Papyrus Wedges Repair
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.