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.Fabrizio Chini Ankle Boot - Women Fabrizio Chini Ankle Boots online on YOOX United Kingdom - 11434793HV , Cesare P. Sneakers - Women Cesare P. Sneakers online on YOOX United Kingdom - 11517032NEKANGAROOS 332-37 FASHION BALLERINAS FOR WOMEN , GEOX D827ua-geox PLATFORM SANDALS FOR WOMEN , New Balance 96 Womens Sophisticated - Sneakers - Women New Balance Sneakers online on YOOX United Kingdom - 11103987CNSteve Madden Debbie Sandal - Sandals - Women Steve Madden Sandals online on YOOX United Kingdom - 11436705MPFree People Tan Black Tiger High Top Pony Hair Sneakers New 9.5-10 Sneakers , Birkenstock Black /White Accents Gizeh Birko-flor Women's SandalsWOMEN Christian Louboutin .... Formal Shoes Charming design , Ladies Charlotte Olympia Black V009630snh001 Sneakers Special PriceTHIERRY RABOTIN 1436 FASHION FOOTWEAR FOR WOMEN , MORESCHI 41296 FASHION ANKLE BOOTS FOR WOMEN , BOBS from SKECHERS Bobs Cloudy - Dream MachineVioleta by Mango Mules Colour: black , Kelsi Dagger Brooklyn Kenmare Ankle Boot , men/women Zign High heeled sandals Outstanding featuresmens/womens Blue by Betsey Johnson Sage Heels special promotion , Men/Women GUESS Trotta Sneakers & Athletic GUESS Fine wild , men's/women's Sam Edelman Lear Sneakers & Athletic Sam Edelman main categoryAdidas Roxy LINN BOOT - Ankle boots - brown , Adidas Peter Kaiser TESSI - Slip-ons - sand shimmer/silber corfuAdidas Paloma Barceló TILO - Platform sandals - blackGeox Sandals - Women Geox Sandals online on YOOX United Kingdom - 11414041KH , Katia G. Court - Women Katia G. Courts online on YOOX United Kingdom - 11088179TU , Orders are welcome Keen Utility Flint MidVarious goods Born Mai Easy , OluKai Moloa The Moloa will have you steppin' with the carefree island style of OluKai for those 'lazy' days under the sun , womens Tory Burch Black/Ivory/Coconut 12158501 Wedges selling price , Ladies Alexander Wang Burgundy Vika Sandals Consumers firstDolce&Gabbana Cream and 1black Tennis Sport 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.