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.Liu ?Jo Shoes Sandals - Women Liu ?Jo Shoes Sandals online on YOOX United Kingdom - 11196392KS , Class Roberto Cavalli Sandals - Women Class Roberto Cavalli Sandals online on YOOX United Kingdom - 11562713VEGEOX D621ec-geox LOW-TOP TRAINERS FOR WOMENEvolution TSUGI Jun Sport Stripes Sneakers | GViolet-PWhite-Peacoat-RRed , Converse All Star Ct A/S Leather - Sneakers - Men Converse All Star Sneakers online on YOOX United Kingdom - 11551359TJ , Adidas Originals Samba Recon Lt - Sneakers - Men Adidas Originals Sneakers online on YOOX United Kingdom - 11533606JI , woman Sigerson Morrison Black Leather Sandals Reasonable pricewomens Christian Louboutin Metallic Sandals Easy to handle , CLARKS Clarkdale Arlo BOTíN PLANO DE MUJER , BOSS ATHLEISURE STORM RUNN ACT - TrainersJulieta studded ankle boots , black, Coolwaymen/women Ca'Shott Platform sandals Vintage tide shoes , mens/womens Jewel Badgley Mischka Tarah Heels Sales Italy , Hogan Sneakers - Women Hogan Sneakers online on YOOX United Kingdom - 11515099NELacoste Sneakers - Men Lacoste Sneakers online on YOOX United Kingdom - 11568300IO , man/woman Frye Flint Firebird Tall Boots High quality and economymen/women Jana Ballet pumps Colour: rose Let our goods go to the world , Bally Sneakers - Women Bally Sneakers online on YOOX United Kingdom - 11535171SK , Strategia Boots - Women Strategia Boots online on YOOX United Kingdom - 11475172MM , Guess Court - Women Guess Courts online on YOOX United Kingdom - 11547099SB , Doucal's Loafers - Women Doucal's Loafers online on YOOX United Kingdom - 11502630KX , Rodo Ankle Boot - Women Rodo Ankle Boots online on YOOX United Kingdom - 11542152MLAlaïa Ankle Boot - Women Alaïa Ankle Boots online on YOOX United Kingdom - 11536091LS , Valentino White Embellished Butterfly Leather Sneakers , lady Christian Louboutin Blueish Platforms trendy , cheap price Reef Ridge Mid Lux , Special purchase Loeffler Randall Clara , ALDO Campodoro Keep an exotic detail in your wardrobe with these Aldo Campodoro sandals , womens Vic Matié Wedge Platforms Elegant and robust packaging , Dolce&Gabbana Dolce & Gabbana Running Sneakers 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.