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 Ankle Boot - Women Vic Matiē Ankle Boots online on YOOX United Kingdom - 11471819GE , Rocco P. Ankle Boot - Women Rocco P. Ankle Boots online on YOOX United Kingdom - 11536843JN , Dr. Martens Ballet Flats - Women Dr. Martens Ballet Flats online on YOOX United Kingdom - 11293600BI , Mcq Alexander Mcqueen Loafers - Women Mcq Alexander Mcqueen Loafers online on YOOX United Kingdom - 11439906BISaucony Jazz O W - Sneakers - Women Saucony Sneakers online on YOOX United Kingdom - 11545163BM , lady Simone Rocha Slides Sandals New , MISS Brighton Cream April Sandals RepairLadies Hermès Sandals Clever and practicalAsh CULT White / Silver , Marc By Marc Jacobs Ankle Boot - Women Marc By Marc Jacobs Ankle Boots online on YOOX United Kingdom - 11444614WOJil Sander Navy Ankle Boot - Women Jil Sander Navy Ankle Boots online on YOOX United Kingdom - 11491015VFTory Burch Blue Brown Light Logo Espadrilles Flat Sandals , Donald J. Pliner Black Strappy Comfort Casual SandalsLadies Prada Brown Pony Skin Sandals price concessions , men/women Stuart Weitzman Barrio Heels Modern designAdidas Victoria Shoes Trainers - blancoman/woman Think! 87255 Boots Great varietymens/womens Mark Nason Kimball Oxfords At an affordable price , Nike Performance CITY TRAINER 2 - Sports shoesMen/Women Rupert Sanderson Devon Loafers Sales online storeNovesta Sneakers - Men Novesta Sneakers online on YOOX United Kingdom - 11578739NI , Alberto Guardiani Sneakers - Men Alberto Guardiani Sneakers online on YOOX United Kingdom - 11568601TP , Alberto Guardiani Sandals - Women Alberto Guardiani Sandals online on YOOX United Kingdom - 11254963CN , N° 21 Sneakers - Women N° 21 Sneakers online on YOOX United Kingdom - 11550335OH , lady Chloé Navy Canvas Wedges On-lineO616fiVf LifeStride Xripley - Wide Calf , LMqRk1XY Kenneth Cole Unlisted Beautiful BalladOnline Shopping Sperry Saltwater Emboss Wool , King of the crowd Frye Briggs Boat Shoe , Crazy price Miz Mooz Tessa
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.