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.Puma Jamming Fusefit - - Sneakers - Men Puma Sneakers online on YOOX United Kingdom - 11540929KK , Cesare P. Sneakers - Women Cesare P. Sneakers online on YOOX United Kingdom - 11455853MHRodolphe Menudier Loafers - Women Rodolphe Menudier Loafers online on YOOX United Kingdom - 11331118MQ , Unisa Ankle Boot - Women Unisa Ankle Boots online on YOOX United Kingdom - 11520609LDSOTOALTO Italico FASHION SANDALS FOR WOMEN , Women's Report Signature Black Leyta Sandals Used in durability , lady Marabelle Black Sandals For your choice , lady Tod's Brown Mule Sandals Bright colorsmen's/women's Nine West Sholette Loafers Fast delivery , ONLY SHOES ONLSAPHIR - Trainers Colour: iris , Lola Cruz High heeled sandals , Pier One Over-the-knee boots Colour: black , Puma TSUGI JUN - Trainers - puma white/puma black/phlox , men/women PUMA Tatau Fur Boot GTX Boots Outstanding style , Pepe Jeans IN 45 - Trainers - navyTod's Sneakers - Men Tod's Sneakers online on YOOX United Kingdom - 11412446JB , Superdry METEORA CHELSEA BOOT - Classic ankle boots - blackPony Sneakers - Women Pony Sneakers online on YOOX United Kingdom - 11559372UECasadei Sneakers - Women Casadei Sneakers online on YOOX United Kingdom - 11204834OL , Mally Boots - Women Mally Boots online on YOOX United Kingdom - 11476326NC , Melissa Sandals - Women Melissa Sandals online on YOOX United Kingdom - 11353843RECuoieria Ankle Boot - Women Cuoieria Ankle Boots online on YOOX United Kingdom - 11483378NE , Bruno Premi Court - Women Bruno Premi Courts online on YOOX United Kingdom - 11526248SDIsabel Marant Sneakers - Women Isabel Marant Sneakers online on YOOX United Kingdom - 11538845DSF.Lli Bruglia Court - Women F.Lli Bruglia Courts online on YOOX United Kingdom - 11519917AGNew Balance Sneakers - Men New Balance Sneakers online on YOOX United Kingdom - 11476853VPzE2O9MvE The North Face Storm III , Not so expensive Pikolinos Rotterdam 902-9945WOMEN Burberry Black House Check Pumps Authentic guaranteewoman Jimmy Choo Blue Wedges Low costs
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.