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.Tosca Blu Shoes Court - Women Tosca Blu Shoes Courts online on YOOX United Kingdom - 11531941RV , Kendall + Kylie Sandals - Women Kendall + Kylie Sandals online on YOOX United Kingdom - 11483878LXCesare Paciotti 4Us Sneakers - Men Cesare Paciotti 4Us Sneakers online on YOOX United Kingdom - 11500595TQ , Converse Navy Blue White Sneakers Stylish Classic High Tops Sneakers , Platform Women's Trace Blocks | Ster Blue-Vani Ice-Vani IceReebok Dmx Series 2000 Low - Sneakers - Men Reebok Sneakers online on YOOX United Kingdom - 11576830HPAgata Sudini Tacy Tan Perforated Suede Fashion Sneakers Sneakers , Nine West Natural Leisa Leather Two-piece Kitten Heel SandalsLadies Prada Silver Metallic Crossover Sandals Stylish and funny , womens Prada Nude/Tan Wedges Elegant and robust menu , Women's Tory Burch Brown/Black Sandals Special PriceWomen's Tory Burch Navy 415 Sandals finishingWOMEN INC International Concepts Rhinestone Sandals Wholesale , Jordan SUPER.FLY TEAM SLIDE - Pool sliders , men/women Leather trainers , champagne, Geox Shoes good quality , men's/women's Kenneth Cole Reaction Fine Sun Heels Rich designmen's/women's L'Amour Des Pieds Northville Sandals Fair pricePepe Jeans JAYDEN - Trainers - marine , Loriblu Sneakers - Men Loriblu Sneakers online on YOOX United Kingdom - 11510622LHTod's Sneakers - Men Tod's Sneakers online on YOOX United Kingdom - 11569723RH , Peter Kaiser Wide Fit WIDE FIT TRIXI - Classic heels Colour: silber estrellaStele Sandals - Women Stele Sandals online on YOOX United Kingdom - 11376346CV , Clocharme Ballet Flats - Women Clocharme Ballet Flats online on YOOX United Kingdom - 11527785XT , Patrizia Pepe Boots - Women Patrizia Pepe Boots online on YOOX United Kingdom - 11284166IG , Lola Cruz Sandals - Women Lola Cruz Sandals online on YOOX United Kingdom - 11563772XVRobert Clergerie Sandals - Women Robert Clergerie Sandals online on YOOX United Kingdom - 11326599DWCL2gJliU ECCO Sport Exostrike GORE-TEX BootFirst quality Clarks Gracelin Jonas , Puma White Alexander Mcqueen Brace Femme Tennis / 35.5e SneakersAsics Yellow Plum Women's Gel Noosa Tri 9 Running Sneakers
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.