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.Under Armour UA Leadoff Mid RMOrange Brilliant Open Toe Slip-on SandalsSuede Classic Street 2 Women’s Sneakers | Wins Orchid-Puma Aged Silver | PUMA Women's Faves | PUMA United Stateslady Gianmarco Lorenzi Black Camoscio Platforms Nice color , lady Cole Haan Beige Bow Wedges High-qualityman/woman Dune London Melody Heels Current shape , men's/women's Nine West Daithi Heels Complete specifications , Adidas Tamaris Classic heels - roseBullboxer Classic ankle boots Colour: blackECCO Soft 5 Cross Strap Sandal , men/women Pikolinos Glasgow M05-6544C1 Boots Easy to useCasadei Sneakers - Women Casadei Sneakers online on YOOX United Kingdom - 11278403QJ , Asics Sneakers - Men Asics Sneakers online on YOOX United Kingdom - 11554432ED , mens/womens Rose Petals Jolie Heels The first batch of customers' comprehensive specificationsLeather Crown Sneakers - Men Leather Crown Sneakers online on YOOX United Kingdom - 11537005EGAlbano Sandals - Women Albano Sandals online on YOOX United Kingdom - 11532534CS , Calpierre Sandals - Women Calpierre Sandals online on YOOX United Kingdom - 11579910NB , Twiggy Court - Women Twiggy Courts online on YOOX United Kingdom - 11473195XRGrey Mer Sneakers - Women Grey Mer Sneakers online on YOOX United Kingdom - 11507109XRHogan Rebel Sneakers - Women Hogan Rebel Sneakers online on YOOX United Kingdom - 11540140VSNew Balance Sneakers - Women New Balance Sneakers online on YOOX United Kingdom - 11569851BM , Nike Outburst - Sneakers - Women Nike Sneakers online on YOOX United Kingdom - 11511850CF , womens L.A.M.B. Lamb Platforms Modern designBeautiful color Palladium S_U_B Mid CuffCrazy price Miz Mooz Tessa , Medium cost Pikolinos Andorra 913-5652Aravon Patrina-AR Put your best foot forward in the professional Patrina ankle bootMephisto Loriane Get ready to fall in love with the lovely Loriane loafer from MephistoCarrucci Jefferson You can tell a lot from a gentleman's shoes, so make sure you are set to impress with a pair of the Jefferson derby shoesRene Caovilla Turquiose Multicolor Suede Embellished T-strap Sandals ,
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.