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.Luca Valentini Ankle Boot - Women Luca Valentini Ankle Boots online on YOOX United Kingdom - 11382844KF , Barbara Bui Court - Women Barbara Bui Courts online on YOOX United Kingdom - 11485269DA , Gisèl Moirè Paris Boots - Women Gisèl Moirè Paris Boots online on YOOX United Kingdom - 11481048GX , Puma X Sophia Webster Sneakers - Women Puma X Sophia Webster Sneakers online on YOOX United Kingdom - 11559528QW , men's/women's Rebecca Minkoff Elisha Sandals Low priceRedskins GRENAT - Trainers - navyWide fit black leather heels, sizes 38-45 , black, Castaluna , Puma TSUGI JUN - Trainers - puma white/puma black/phloxMelvin & Hamilton LANCE - Smart slip-ons - woodFiore di Lucia Milano ANIMA - T-bar sandals Colour: platino , man/woman Jack Rogers Pretty in Pastel Sandals Fine wild , Nike SB PORTMORE II SOLAR MID - TrainersDiadora Sneakers - Men Diadora Sneakers online on YOOX United Kingdom - 11506229JPButtero® Boots - Men Buttero® Boots online on YOOX United Kingdom - 11497577CSmens/womens Keen Presidio MJ Flats a good reputation in the worldSaucony FREEDOM ISO 2 - Neutral running shoes - vizired/black , Leonardo Principi Loafers - Men Leonardo Principi Loafers online on YOOX United Kingdom - 11448390SOIshikawa Sneakers - Women Ishikawa Sneakers online on YOOX United Kingdom - 11521083CW , Silvian Heach Boots - Women Silvian Heach Boots online on YOOX United Kingdom - 11550214FN , Pedro García Sandals - Women Pedro García Sandals online on YOOX United Kingdom - 11572436FWWindsor Smith Sandals - Women Windsor Smith Sandals online on YOOX United Kingdom - 11156426RK , John Richmond Sneakers - Women John Richmond Sneakers online on YOOX United Kingdom - 11403302EPJimmy Choo Sandals - Women Jimmy Choo Sandals online on YOOX United Kingdom - 11474487EO , Won highly appreciated and widely trusted at home and abroad Etro Tweed Medallion Oxford , Modern design Bogs Workman Mid1.STATE Genia Find an edgy style to be your new go-to's with these gorgeous 1.STATE Genia flats , Salvatore Ferragamo Black / Pink / White Glenn Polished Gancio Ankle Strap Patent Leather Sandals , lady Guess Olive Wedges Known for its beautiful quality , Miu Miu Orange Satin and Grosgrain Slide SandalsWOMEN Christian Louboutin Nude Exagona Platforms Unique ,
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.