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.Paolo Simonini Open-Toe Mules - Women Paolo Simonini Open-Toe Mules online on YOOX United Kingdom - 11377643TC , Rodolphe Menudier Court - Women Rodolphe Menudier Courts online on YOOX United Kingdom - 11512675HN , Andìa Fora Sneakers - Women Andìa Fora Sneakers online on YOOX United Kingdom - 11531512BS , Asics Neon Pink I Think. SneakersMERCEDES AMG PETRONAS Motorsport Drift Cat 7 Sneakers | Puma White-Puma White | PUMA Mercedes AMG Petronas | PUMA United StatesPink & Pepper Blue White Silver Prosper Slip Woven Loafers Sneakers Flats Tweed Sneakers , Nike Navy Blue Jordan Russell Westbrook 0.2 Sneakers Sneakers , LADY Christian Louboutin Blue 40 Wedges Moderate costsWOMENS Giuseppe Zanotti Burgundy Sneaker Sneakers Flagship storeadidas by Stella McCartney CrazyTrain Bounce Mid , men's/women's El Naturalista Alhambra NG13 Boots High-qualitymens/womens Rocket Dog Lunar Loafers excellent qualitymen's/women's Nine West Lynneah Heels Different goodsMen/Women Born Dutchman Boot Boots Superb craftsmanship , Y's by Yohji Yamamoto Jute SandalsSKECHERS Performance Go Step - MarinaAdidas Paloma Barceló LILO - Heeled mules - orange , Converse ONE STAR - Trainers - ash grey/white , Men/Women Chinese Laundry Ocean Avenue Heels Year-end sale , men's/women's Nine West Lialo Heels Easy to useAsics Sneakers - Men Asics Sneakers online on YOOX United Kingdom - 11558319BQ , Under Armour PROJECT ROCK 1 - Sports shoes - whiteman/woman Trainers , pink, Nike Shoes At an affordable price , men's/women's Yosi Samra Vienna 2 Flat Flats Stylish and funAudley Court - Women Audley Courts online on YOOX United Kingdom - 11460797IFFrye Boots - Women Frye Boots online on YOOX United Kingdom - 11022764XE , D-S!De Sneakers - Women D-S!De Sneakers online on YOOX United Kingdom - 11236356SSSales online store Donald J Pliner LouAquazzura Azalea Pink Cosmic Stars Sneaker SneakersBrown Zero Drop Minimalist Mary Jane Flats ,
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.