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.Logan Crossing Ankle Boot - Women Logan Crossing Ankle Boots online on YOOX United Kingdom - 44883677IF , Antonio Marras Court - Women Antonio Marras Courts online on YOOX United Kingdom - 11488273QW , FitFlop Loosh Luxe™ Z-Strap Leather SandalsG.P. Per Noy Bologna Ankle Boot - Women G.P. Per Noy Bologna Ankle Boots online on YOOX United Kingdom - 11549239EF , woman Birkenstock Arizona Sandals Highly appreciated and widely trusted in and outwoman Dockers Slipons Wedges High quality and cheap , CLARKS Un Briarcrest FASHION BALLERINAS FOR WOMENRIANDA F9271 Silver FASHION SANDALS FOR WOMENcamel active TRADE - Classic ankle boots - moccaman/woman Sanuk Fraid So Sandals At a lower priceVans | Vans SK8-Mid Reissue Sneakers In Red VA3MV8U8MMen/Women Rockport Total Motion Adelyn Ghillie Flats ImpeccableL37 RUNWAY - High heeled boots Colour: redCasbia Sneakers - Men Casbia Sneakers online on YOOX United Kingdom - 11211037BQSantoni Sneakers - Men Santoni Sneakers online on YOOX United Kingdom - 11541304ESLeather Crown Sneakers - Men Leather Crown Sneakers online on YOOX United Kingdom - 11464582QKCafènoir Loafers - Women Cafènoir Loafers online on YOOX United Kingdom - 11515069VP , Stiù Boots - Women Stiù Boots online on YOOX United Kingdom - 11461465AH , Corvari Boots - Women Corvari Boots online on YOOX United Kingdom - 11546723BQHogan Sandals - Women Hogan Sandals online on YOOX United Kingdom - 11122317JALoretta Pettinari Sandals - Women Loretta Pettinari Sandals online on YOOX United Kingdom - 11564722CISergio Rossi Court - Women Sergio Rossi Courts online on YOOX United Kingdom - 11434147WVAdidas Originals Sneakers - Men Adidas Originals Sneakers online on YOOX United Kingdom - 11495261OXSpeed refund Altra Footwear Provision 3 , main category Donald J Pliner PiperNew products in 2045 Irish Setter Wingshooter 807Sam Edelman Black Suede Susie Ankle Strap Heel Sandals , Ladies Valentino Nude Rockstuds Slide Sandals Very good qualityLadies Dolce Vita Turquoise Stella Wedges Exquisite workmanship , lady Madewell Brown Flat Sandals Price reduction
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.