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.Tipe E Tacchi Boots - Women Tipe E Tacchi Boots online on YOOX United Kingdom - 11503871PJ , Saint Laurent Ankle Boot - Women Saint Laurent Ankle Boots online on YOOX United Kingdom - 11363103HLAtos Lombardini Sneakers - Women Atos Lombardini Sneakers online on YOOX United Kingdom - 11486217UWSTONEFLY Rock 3 SLIP-ON PARA MUJER , Nike Black Zoom Structure 19 Sneakers , Prada Black Patent with Wood SandalsPrlPpSi3 men/women Blondo Sasha Boots serviceTSUGI NETFIT v2 evoKNIT Sneakers | Quarry-White-Spectra Yellow | PUMA Men's Picks | PUMA United StatesMARIA MARE 67173 C19485 Rojo WEDGE-HEEL ESPADRILLES FOR WOMENMen/Women Vaneli Danil Heels Good world reputation , man/woman Deer Stags Simple Oxfords durable , David Tate Valley 18" Wide ShaftForever New FLOWER VAMP - High heeled sandals , Casadei Court - Women Casadei Courts online on YOOX United Kingdom - 11542717VV , Nike Sneakers - Men Nike Sneakers online on YOOX United Kingdom - 11508297BR , Pollini Sneakers - Men Pollini Sneakers online on YOOX United Kingdom - 11569982TIBurberry Boots - Men Burberry Boots online on YOOX United Kingdom - 11511193BTMen/Women Reebok Classic Renaissance Sneakers & Athletic Reebok Orders are welcome , Barleycorn Loafers - Women Barleycorn Loafers online on YOOX United Kingdom - 11478899JFLaura Biagiotti Loafers - Women Laura Biagiotti Loafers online on YOOX United Kingdom - 11505822VK , Fausto Puglisi Sandals - Women Fausto Puglisi Sandals online on YOOX United Kingdom - 11563178HE , Chiara Ferragni Boots - Women Chiara Ferragni Boots online on YOOX United Kingdom - 11493402CR , CCnaDhjJ Athena Alexander Enfield Sandal Wedge , EWYsDLrv LADY Prada Green Sandals luxury , Moderate cost Rebecca Minkoff PalmaElegant and sturdy set meal Eric Michael Sharonlow cost Corral Boots A3304women Valentino Nude Ankle Strap Pumps Professional designSaucony White with Blue Omni Progrid Sneakers , MISS Jack Rogers Brown Sandals Reasonable price ,
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.