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.Vagabond Shoemakers Ankle Boot - Women Vagabond Shoemakers Ankle Boots online on YOOX United Kingdom - 11512876GSLiu ?Jo Ankle Boot - Women Liu ?Jo Ankle Boots online on YOOX United Kingdom - 11069372RGGianni Barbato Court - Women Gianni Barbato Courts online on YOOX United Kingdom - 11534279MU , Magrit Ankle Boot - Women Magrit Ankle Boots online on YOOX United Kingdom - 11504521ODWOMEN Impo Silver Sandals Modern designMISS Loeffler Randall Black Dani Sandals Very good colorNike Black/ Metallic Accents Lebron Xii Elites Sneakers , lady Tsubo Camel Comfortable Wedges Consumers first , woman Pedro Garcia Pumps Popular tide shoes , men/women Frye Valerie Pull On Boots Onlinemen/women Tahari Waver Heels renewed on time , Emporio Armani Trainers - blue/lime/blackmen's/women's Roper Short Stuff Boots High quality and economyConverse Chuck Taylor? All Star Tipped Metallic Toecap OxMen/Women Kelsi Dagger Brooklyn Mayfair Heels Different stylesDondup Sneakers - Men Dondup Sneakers online on YOOX United Kingdom - 11525123JSmen's/women's French Sole Bid 2 Heels a lot of varietiesmen/women Bruno Magli Nuncio Boots Pick up at the boutique , Guess Sandals - Women Guess Sandals online on YOOX United Kingdom - 11383126WQ , Eye Boots - Women Eye Boots online on YOOX United Kingdom - 11513950LH , Deimille Court - Women Deimille Courts online on YOOX United Kingdom - 11399776RJ , Angela George Sandals - Women Angela George Sandals online on YOOX United Kingdom - 11460352JUCole Haan Powder Blue Jeweled Sandals , wTTDDdAC Asolo Nucleon Mid GV MM , uIkQdTi2 The North Face Ultra 109Popular tide shoes See by Chloe SB30211 , A balance between toughness and hardness Jewel Badgley Mischka JohannaBurberry Multicolor Signature Novacheck Leather Bow Brown Sandalsladies Alexander McQueen Puma Hightops Pumps Pleasant appearancelady Saint Laurent Grey Stilettos Platforms Really
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.