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.Maison Margiela Ankle Boot - Women Maison Margiela Ankle Boots online on YOOX United Kingdom - 11327680OKVicini Tapeet Sandals - Women Vicini Tapeet Sandals online on YOOX United Kingdom - 11396611HMLiu •Jo Shoes Court - Women Liu •Jo Shoes Courts online on YOOX United Kingdom - 11335929DSTommy Hilfiger Lightweight Knit Sneaker - Sneakers - Men Tommy Hilfiger Sneakers online on YOOX United Kingdom - 11457580PGStella McCartney Multicolor Black & White Eclypse Trainers Sneakers , Vince Black Warner Platform Sneaker Slip On SneakersJimmy Choo Multi - Pink Green White Sandals , woman Zara Pink/Tan Bead Slides Sandals Pleasant feelingEspadrij l′originale CLASSIC - Espadrilles Colour: ecru/ocean , men's/women's Italian Shoemakers Pearls Heels VariousCantona leather brogues , beige, Tamarisadidas Performance CRAZYFLIGHT X 2.0 - Volleyball shoes Colour: blackmen/women Adidas Response Adv Boots Schuhe the most convenientman/woman WANT Les Essentiels Montoro Derby Oxfords Clearance price , Camper RUNNER FOUR - Trainers - medium gray , men/women Nine West Seeya Flats Easy to use , men/women Jack Rogers Fireworks Sandals Practical and economicalAdidas Calvin Klein Jeans SHANNA - High heeled ankle boots - black , Nike Sportswear AIR VORTEX - Trainers - navy/team red/sail/medium brown/vachetta tanRoberto Botticelli Sneakers - Men Roberto Botticelli Sneakers online on YOOX United Kingdom - 11405668NERodo Sandals - Women Rodo Sandals online on YOOX United Kingdom - 11461838JUMarella Sneakers - Women Marella Sneakers online on YOOX United Kingdom - 11484561RO , Cult Ankle Boot - Women Cult Ankle Boots online on YOOX United Kingdom - 11475503BV , Avec Modération Slippers - Women Avec Modération Slippers online on YOOX United Kingdom - 11254195VH , Roger Vivier Court - Women Roger Vivier Courts online on YOOX United Kingdom - 11504224VPklNsBl60 Keen Lower East Side MJ , New design ECCO Soft 5 Slip-On , Tory Burch Natural Roccia/Tan Savannah 45mm Wedge Dune Snake/Veg Leather Sandals , Saint Laurent Blue Stud Ankle Strap Clogs Mules SandalsPrada Cream/Gray Double * Cream/Gray Leather Velcro Sneakers
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.