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.Nike Grandstand Ii Pncl - Sneakers - Men Nike Sneakers online on YOOX United Kingdom - 11440739GP , G Basic Sneakers - Women G Basic Sneakers online on YOOX United Kingdom - 11462010DV , Roger Vivier Black De Nuit Pumps , zE2ksw7P mens/womens ALDO Cycia Oxfords value , Kendall + Kylie Sandals - Women Kendall + Kylie Sandals online on YOOX United Kingdom - 11338020KMTwin-Set Simona Barbieri Sandals - Women Twin-Set Simona Barbieri Sandals online on YOOX United Kingdom - 11270660GVLadies Tory Burch Jamie New Sandals Nice and charmingWomen's YEEZY Blue Tint Sneakers shopping online , Puma BASKET HEART SCALLOP - Trainers FromBoxfresh SPARKO - Trainers - russettShepherd KLAS - Classic ankle boots , Men/Women Born Nisbet Boots special functionman/woman Bernardo Tristan Sandals Modern modeman/woman Rochas RO29222-06263 Boots Settlement PriceZign T-bar sandals - black , man/woman Roxy Chica Sneakers & Athletic Roxy Acknowledgement feedback , ASOS DESIGN | ASOS MAXWELL Wide Fit Leather LoafersW suede classic trainers , light grey, Puma , New Look CALVIN - Espadrilles - black , Pantofola D'oro Sneakers - Men Pantofola D'oro Sneakers online on YOOX United Kingdom - 11353628XFmens/womens Hoka One One Arahi Sneakers & Athletic Hoka One One Good world reputationJeannot Sandals - Women Jeannot Sandals online on YOOX United Kingdom - 11548265XKMarella Sandals - Women Marella Sandals online on YOOX United Kingdom - 11372682QAGiorgio Armani Court - Women Giorgio Armani Courts online on YOOX United Kingdom - 11469011HPFormentini Ankle Boot - Women Formentini Ankle Boots online on YOOX United Kingdom - 11478953NGChiara Ferragni Loafers - Women Chiara Ferragni Loafers online on YOOX United Kingdom - 11212624DUladies Børn Tan Wedges High securityPick up at the boutique Camper Misia - K200592 , LADY Christian Louboutin Black Bibi Platforms Excellent quality , Valentino Pink Metal Cube Ankle Strap Sandals ,
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.