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.Sartori Gold Ankle Boot - Women Sartori Gold Ankle Boots online on YOOX United Kingdom - 11249940UATwin-Set Simona Barbieri Sandals - Women Twin-Set Simona Barbieri Sandals online on YOOX United Kingdom - 11218376VG , Giancarlo Paoli Court - Women Giancarlo Paoli Courts online on YOOX United Kingdom - 11375335WVA.S. 98 Loafers - Women A.S. 98 Loafers online on YOOX United Kingdom - 11388226ST , J|D Julie Dee Ankle Boot - Women J|D Julie Dee Ankle Boots online on YOOX United Kingdom - 11500460IVLe Marinē Ankle Boot - Women Le Marinē Ankle Boots online on YOOX United Kingdom - 11485913SA , Adidas Copenhagen Ballet pumps - navy , Birkenstock GIZEH - T-bar sandals Colour: white , Nike Sportswear AIR VORTEX - Trainers - burgundy crush/sail/blackmen's/women's Massimo Dutti Moccasins Colour: black have funAdidas New Balance GW500 - Trainers - burgundy , River Island Wide Fit Classic heels Colour: greyPreventi Boots - Men Preventi Boots online on YOOX United Kingdom - 11498558QABarracuda Boots - Men Barracuda Boots online on YOOX United Kingdom - 11531602LB , Reebok CROSSFIT NANO 8 FLEXWEAVE - Sports shoes Colour: classic white/exellent red/blue , Puma JAMMING FS RTF TRAINERS - Trainers - black/sodalite blue , men/women Donald J Pliner Corin 2 Heels Popular tide shoes , Adidas Originals Sneakers - Men Adidas Originals Sneakers online on YOOX United Kingdom - 11495373CXASOS DESIGN | ASOS DESIGN loafers in tan leather with woven detail and chainAlbano Sandals - Women Albano Sandals online on YOOX United Kingdom - 11372891IKEspadrilles Sandals - Women Espadrilles Sandals online on YOOX United Kingdom - 11400775VL , Norma J.Baker Boots - Women Norma J.Baker Boots online on YOOX United Kingdom - 11557960VCAnnarita N. Court - Women Annarita N. Courts online on YOOX United Kingdom - 11561743LC , Manas Ankle Boot - Women Manas Ankle Boots online on YOOX United Kingdom - 11285559PRCasadei Ankle Boot - Women Casadei Ankle Boots online on YOOX United Kingdom - 11308984FIContrary to the same paragraph Giorgio Brutini London , Ariat Dulce The stylish Dulce bootie from Ariat boasts a fun, feminine look that will complement both jeans and leggings. , adidas Pink Nmd R2 Women's Streetwear Wonder White SneakersWOMENS Jimmy Choo Patent Wedges High quality and economyAthletic Propulsion Labs White Black 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.