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.Cesare Paciotti Ankle Boot - Women Cesare Paciotti Ankle Boots online on YOOX United Kingdom - 11505143GPNicole Bonnet Paris Court - Women Nicole Bonnet Paris Courts online on YOOX United Kingdom - 11467283ENEmporio Armani Sneakers - Women Emporio Armani Sneakers online on YOOX United Kingdom - 11284083PLMarco Ferretti Sandals - Women Marco Ferretti Sandals online on YOOX United Kingdom - 11127973TBBernie Mev. Sneakers - Women Bernie Mev. Sneakers online on YOOX United Kingdom - 11405175SKBlue Red and Orange Toddler Sneakers , LEVIS Vtru0008t Trucker Low 0010 Blue LOW-TOP TRAINERS FOR WOMENSaint Laurent Silver Star Court Metallic Leather Sneakers SneakersWOMEN Soda Blu Coral Oakley-s Wedges Exquisite (medium) workmanship , LADY Tory Burch Nutria-gold Raleigh Wedges Pleasant feelingmen's/women's Frances Valentine Zoey Flats Perfect processing , Maria Mare ABY - MulesU box c suede leather trainers , navy blue, Geoxmen/women Adidas Women's NMD_R1 Shoes Schuhe Human border , man/woman Gabor Platform heels Modern modeQuattrobarradodici Sneakers - Men Quattrobarradodici Sneakers online on YOOX United Kingdom - 11433961BXFabi Loafers - Men Fabi Loafers online on YOOX United Kingdom - 11534367HMGeox Sneakers - Men Geox Sneakers online on YOOX United Kingdom - 11539448AJAntica Cuoieria Boots - Men Antica Cuoieria Boots online on YOOX United Kingdom - 11556843CJ , Mercer Amsterdam Sneakers - Men Mercer Amsterdam Sneakers online on YOOX United Kingdom - 11558990XM , Sax Sneakers - Women Sax Sneakers online on YOOX United Kingdom - 11518190ABMarni Sandals - Women Marni Sandals online on YOOX United Kingdom - 11418293OTRuco Line Sandals - Women Ruco Line Sandals online on YOOX United Kingdom - 11334982KVMarsèll Ankle Boot - Women Marsèll Ankle Boots online on YOOX United Kingdom - 11174793OL , h5NLGkbe Foot Petals Technogel Pressure Pointz , I8Kokwit Nike Phantom 3 Academy FG , Tide shoes list Jack Rogers Georgica Sandal , International big name Clarks Delana Liri , Popular recommendation Ted Baker FanngoLiu •Jo Shoes Sneakers - Women Liu •Jo Shoes Sneakers online on YOOX United Kingdom - 11141484IT ,
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.