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.Jeffrey Campbell Flip Flops - Women Jeffrey Campbell Flip Flops online on YOOX United Kingdom - 11503250RT , Get It Ankle Boot - Women Get It Ankle Boots online on YOOX United Kingdom - 11518161SKFabrizio Chini Ankle Boot - Women Fabrizio Chini Ankle Boots online on YOOX United Kingdom - 11434793HVGiovanni Conti Loafers - Women Giovanni Conti Loafers online on YOOX United Kingdom - 11520087WT , PIKOLINOS 913-8797 FASHION FOOTWEAR FOR WOMEN , MISS Dolce&Gabbana Leopard Multi Wedges economy , Agl Attilio Giusti Leombruni Ankle Boot - Women Agl Attilio Giusti Leombruni Ankle Boots online on YOOX United Kingdom - 11554549AN , Collection Privēe? Ankle Boot - Women Collection Privēe? Ankle Boots online on YOOX United Kingdom - 11072766TOMen/Women Patricia Green Tessa Heels Excellent stretching , men's/women's Calvin Klein Elroy Oxfords Easy life , Tata Italia High heeled sandals , Hummel AEROCHARGE HB180 2.0 - Handball shoes Colour: iced aqua , RAID BRUNETTA - High heeled ankle boots Colour: black , Adidas Sneakers - Men Adidas Sneakers online on YOOX United Kingdom - 11527734HI , Barleycorn Loafers - Men Barleycorn Loafers online on YOOX United Kingdom - 11549029KN , Nike Sportswear SF AF1 - High-top trainers - blue tint/blue tint-blue tint-black , Men/Women Lacoste Straightset 217 1 Sneakers & Athletic Lacoste Long-term reputation , Men/Women Freebird Coal Boots a good reputation in the worldJoshua*S Sneakers - Women Joshua*S Sneakers online on YOOX United Kingdom - 11328843RIGuess Sandals - Women Guess Sandals online on YOOX United Kingdom - 11532985HJ , Magrit Court - Women Magrit Courts online on YOOX United Kingdom - 11502518FF , "Intentionally_______." Sandals - Women "Intentionally_______." Sandals online on YOOX United Kingdom - 11564919VO , Gioseppo Sneakers - Women Gioseppo Sneakers online on YOOX United Kingdom - 11575646DI , Candice Cooper Sneakers - Women Candice Cooper Sneakers online on YOOX United Kingdom - 11554566ETGiuseppe Zanotti Boots - Women Giuseppe Zanotti Boots online on YOOX United Kingdom - 11047241UUAnnarita N. Court - Women Annarita N. Courts online on YOOX United Kingdom - 44673538HDBig clearance sale Donald J Pliner Sennet , ladies Roger Vivier Grey Patent Pumps Reasonable delivery and punctual delivery , Christian Louboutin Beige Sexystrapy 70 Heels Sandals , Eürosoft by Söfft Multi Colored Details 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.