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.Le Coq Sportif Sneakers - Men Le Coq Sportif Sneakers online on YOOX United Kingdom - 11534340FCLuca Valentini Sandals - Women Luca Valentini Sandals online on YOOX United Kingdom - 11519734EK , Paola Ferri Boots - Women Paola Ferri Boots online on YOOX United Kingdom - 11477627PUGuess Tan Gold Turquoise Marbela SneakersMy Twin By Twin Set Boots - Women My Twin By Twin Set Boots online on YOOX United Kingdom - 11554917WCNike Performance MERCURIAL SUPERFLY 6 PRO AG PRO - Moulded stud football boots - wolf grey/light crimson/pure platinum/metallic silver , PEPE JEANS Pls 90238 Sailor WEDGE-HEEL SANDALS FOR WOMENSTONEFLY Cream 1 ZAPATO DE CU?A PARA MUJERClarks White Women's Hedge Manor 2 Leather Sneakerslady Pedro Garcia Eloisa Toe-ring Sandals Most practicalSUPERGA 2750 Cebra LOW-TOP TRAINERS FOR WOMEN , MISS Caparros Silver Formal Shoes Perfect workmanship , Peter Kaiser ZAMA - Classic heels , Bianco POINTY STRAP - Ankle strap ballet pumps FromBianco DRESS CHELSEA - Classic ankle boots Frommens/womens Nanette nanette lepore Freya Boots Wholesale trade , men/women Anne Klein Harietta Heels King of quantity , Valsport Sneakers - Men Valsport Sneakers online on YOOX United Kingdom - 11570538UIDiadora Sneakers - Men Diadora Sneakers online on YOOX United Kingdom - 11506229JPBoxfresh Sneakers - Men Boxfresh Sneakers online on YOOX United Kingdom - 11500298QACesare Paciotti Loafers - Men Cesare Paciotti Loafers online on YOOX United Kingdom - 11305062HOmens/womens Shellys London Dilys Platform Sneaker Sneakers & Athletic Shellys London online sale , New Balance Sneakers - Women New Balance Sneakers online on YOOX United Kingdom - 11287625KU , Unisa Ankle Boot - Women Unisa Ankle Boots online on YOOX United Kingdom - 11499809AEAlberto Fermani Sandals - Women Alberto Fermani Sandals online on YOOX United Kingdom - 11563406NJ , Divine Follie Sandals - Women Divine Follie Sandals online on YOOX United Kingdom - 11570567EC , rHKPLauC Blue by Betsey Johnson Sage , Women's Bottega Veneta White Brown Sandals First class in his class , Ladies Donald J. Pliner White Sandals Not so expensive , Women's Skechers Dark Brown Wedges Stylish and charming
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.