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.Vic Matiē Open-Toe Mules - Women Vic Matiē Open-Toe Mules online on YOOX United Kingdom - 11119241CTOpening Ceremony Espadrilles - Women Opening Ceremony Espadrilles online on YOOX United Kingdom - 11304556IF , Mezcalero Ankle Boot - Women Mezcalero Ankle Boots online on YOOX United Kingdom - 11466340AH , Tsd12 Ankle Boot - Women Tsd12 Ankle Boots online on YOOX United Kingdom - 11453969MANike Blue Air Force 1 Sneakers , Liu •Jo Shoes Espadrilles - Women Liu •Jo Shoes Espadrilles online on YOOX United Kingdom - 11548719TJIsabel Marant Étoile Flip Flops - Women Isabel Marant Étoile Flip Flops online on YOOX United Kingdom - 11363243QBlady Christian Louboutin Black Fansy Pumps High quality and economyLOYALTY & FAITH LONDON SHOE - TrainersMen/Women Bettye Muller Waight Boots British temperament , Men/Women Bed Stu Caitlin Heels Acknowledgement feedback , Homers SIENA - Platform boots , men's/women's Colors of California Slip-ons selling priceAdidas Peter Kaiser OFELA - Boots - nubaLevius Sneakers - Men Levius Sneakers online on YOOX United Kingdom - 11565170UTmen's/women's Gravati Bowed Velukid Slip-On Loafer Loafers Stylish and funASOS DESIGN | ASOS DESIGN Wide Fit driving shoes in brown suede with snaffleMalìparmi Sandals - Women Malìparmi Sandals online on YOOX United Kingdom - 11393502JI , Cafènoir Sandals - Women Cafènoir Sandals online on YOOX United Kingdom - 11439812JQ , Hannibal Laguna Court - Women Hannibal Laguna Courts online on YOOX United Kingdom - 11542080RM , Red(V) Ballet Flats - Women Red(V) Ballet Flats online on YOOX United Kingdom - 44993117WBGiancarlo Paoli Court - Women Giancarlo Paoli Courts online on YOOX United Kingdom - 11548491FNEliana Bucci Loafers - Women Eliana Bucci Loafers online on YOOX United Kingdom - 11532870JNLeather Crown Sneakers - Men Leather Crown Sneakers online on YOOX United Kingdom - 11564782BPladies Lanvin Gold Metallic Wedges Germany , sLxT41Y4 Women's Beige Gold Wedges AffordableReliable quality JBU Brava Encorelady Burberry Plaid Nova Check Sneakers Crazy Price, Birminghamwomen Valentino Navy Blue Rockstuds Platforms Fast delivery , women Kristin Cavallari . Sandals Reliable reputation ,
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.