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.Loretta Pettinari Ankle Boot - Women Loretta Pettinari Ankle Boots online on YOOX United Kingdom - 11471825WDShabbies Amsterdam Ankle Boot - Women Shabbies Amsterdam Ankle Boots online on YOOX United Kingdom - 11528093QPGeorge J. Love Espadrilles - Women George J. Love Espadrilles online on YOOX United Kingdom - 11469226IJGBBRAVO 41092 FASHION SANDALS FOR WOMENStephen Good London Ankle Boot - Women Stephen Good London Ankle Boots online on YOOX United Kingdom - 11334185LT , Moa Master Of Arts Sneakers - Men Moa Master Of Arts Sneakers online on YOOX United Kingdom - 11522861SC , LADY Prada Porpora Calzature Donna Platforms Bright colors , ladies Isabel Marant Black/Silver Lenny Sandals Excellent craft , mens/womens Report Aileen Boots Beautiful and charmingAdidas H?gl Ballet pumps - blackRieker HERREN - Slip-ons - schwarzPier One Classic ankle boots Colour: black , SKECHERS Street Double Up - Diamond Girl , Donna Carolina Platform boots Colour: navymen's/women's B Brian Atwood Gigi Heels International big name , Converse Chuck Taylor? All Star Color Block Nubuck OxAdidas Donna Carolina Platform boots - neroP448 Sneakers - Men P448 Sneakers online on YOOX United Kingdom - 11220142HFmen/women Calvin Klein Balthazar Sneakers & Athletic Calvin Klein Exquisite (processing) processing , Public Desire | Public Desire Chaos Black and White Contrast Ankle Bootsmen/women Johnston & Murphy Mindy Heels Easy to clean surfaceSchutz Sandals - Women Schutz Sandals online on YOOX United Kingdom - 11471348RD , Munich Sneakers - Women Munich Sneakers online on YOOX United Kingdom - 11543774DBChiara Ferragni Sneakers - Women Chiara Ferragni Sneakers online on YOOX United Kingdom - 11476225PR , Swedish Hasbeens Sandals - Women Swedish Hasbeens Sandals online on YOOX United Kingdom - 11233987DAWOMENS J.Crew Seville 64498 Wedges tenderSofft Patience The polish and tailored Patience bootie adds sophistication to your work week , Liu •Jo Shoes Sandals - Women Liu •Jo Shoes Sandals online on YOOX United Kingdom - 11434359DNLadies Enzo Angiolini Red .. Wedges new entry , Women's Roger Vivier Silver Belle Pumps Fast delivery
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.