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.Lea Foscati Ankle Boot - Women Lea Foscati Ankle Boots online on YOOX United Kingdom - 11285469KUWindsor Smith Ankle Boot - Women Windsor Smith Ankle Boots online on YOOX United Kingdom - 11479569EWConverse All Star Sneakers - Women Converse All Star Sneakers online on YOOX United Kingdom - 11559482RC , Liu •Jo Shoes Ballet Flats - Women Liu •Jo Shoes Ballet Flats online on YOOX United Kingdom - 11029834HX , Manì Per Donna Più Court - Women Manì Per Donna Più Courts online on YOOX United Kingdom - 11557485DFCALIFERS Sandalias Plataforma Mujer Piel Ja6700g27-multicolor MENORQUINA PARA MUJER , woman Joie Tan Fadey Leather Sandals Win highly appreciatedwomen Supreme Sneakers Strong heat and wear resistance , Ladies Ralph Lauren Jasmine Sandals special discount priceStuart Weitzman Gold Textured Fabric Heels Sandals , Men/Women Nine West Sweetkins Boots Best-selling worldwideman/woman Trask Audra Shearling Boots Optimal price , SKECHERS Vaso Gemelo - Twin Gore Slip-Onman/woman ASH Aveda Heels Optimal price , men/women VOLATILE Lia Heels a wide variety of goodsmens/womens Ben Sherman Milo Thong Sandals Packaging diversityD.A.T.E. Sneakers - Men D.A.T.E. Sneakers online on YOOX United Kingdom - 11486511MHGivenchy Sandals - Men Givenchy Sandals online on YOOX United Kingdom - 11363140KImen's/women's Sam Edelman Lyndon Sneakers & Athletic Sam Edelman Stylish and funMen/Women Shepherd LINA - Slippers Seasonal hot saleTod's Loafers - Women Tod's Loafers online on YOOX United Kingdom - 11575258LBVetiver Loafers - Women Vetiver Loafers online on YOOX United Kingdom - 11362277UAMarni Sneakers - Women Marni Sneakers online on YOOX United Kingdom - 11511382VAAlaïa Flip Flops - Women Alaïa Flip Flops online on YOOX United Kingdom - 11536753GFvH5G4H2A Caterpillar Pursuit 2.0 Steel ToeValuable boutique Ariat Wythburn H2O Insulated , Tory Burch Black with Gold Tb Symbol Unknown Sandals , MISS BCBGeneration Red Mary Jane Wedges special discount price , lady Jeffrey Campbell Brown Suede Sandals luxury , woman Valentino Nude Rockstud Pumps Pleasant appearance
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.