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.Settantatre Lr Ankle Boot - Women Settantatre Lr Ankle Boots online on YOOX United Kingdom - 11515391WDTory Burch Open-Toe Mules - Women Tory Burch Open-Toe Mules online on YOOX United Kingdom - 11444353ACVic Matiē Ankle Boot - Women Vic Matiē Ankle Boots online on YOOX United Kingdom - 11557448RNLe Coq Sportif Quartz Perforated Nubuck - Sneakers - Men Le Coq Sportif Sneakers online on YOOX United Kingdom - 11340655XJ , Nike Classic Cortez Leather Lux - Sneakers - Women Nike Sneakers online on YOOX United Kingdom - 11211914JS , FENTY PUMA by Rihanna Peacoat/Peacoat/Cool Blue Suede Creeper Sneakerswomens Prada Beige Suede Heeled Sandals Pleasant feeling , Walk London JUDE NIGHT - Slip-ons Colour: black , Swift run trainers , black, Adidas OriginalsLacoste CHAYMON - Trainers - black/brownBelstaff DAGENHAM PHOENIX - Trainers Colour: black/graphitemen's/women's PATRIZIA Ranella Sandals Various types and stylesNew Balance AM574BLG - Trainers - whiteChie Mihara NENU - Sandals Colour: cyprus platinoPollini Sneakers - Men Pollini Sneakers online on YOOX United Kingdom - 11563443SKCat Sneakers - Men Cat Sneakers online on YOOX United Kingdom - 11560779MWL'f Shoes Loafers - Men L'f Shoes Loafers online on YOOX United Kingdom - 11481509JW , Pierre Darré Sneakers - Men Pierre Darré Sneakers online on YOOX United Kingdom - 11450954HO , Maison Margiela Loafers - Men Maison Margiela Loafers online on YOOX United Kingdom - 11471869MG , Uri Minkoff Sneakers - Men Uri Minkoff Sneakers online on YOOX United Kingdom - 11491683GA , Pokemaoke Loafers - Women Pokemaoke Loafers online on YOOX United Kingdom - 11544452MUPinko Sneakers - Women Pinko Sneakers online on YOOX United Kingdom - 11554384QW , Geox Sneakers - Women Geox Sneakers online on YOOX United Kingdom - 11571592BQHogan Boots - Women Hogan Boots online on YOOX United Kingdom - 11300366WL , Le Silla Sneakers - Women Le Silla Sneakers online on YOOX United Kingdom - 11503459CV , Noa Harmon Sneakers - Women Noa Harmon Sneakers online on YOOX United Kingdom - 11457903QT , WiSLaOLX Paul Smith Grand Stripe Sneaker , LADY Lucky Brand White Moran Wedges Crazy Price, Birminghamwoman Nike Duel Fusion Sneakers Good worldwide reputationwomens L.A.M.B. Multicolor Bennie Sneakers Customer first
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.