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.( Verba ) Loafers - Women ( Verba ) Loafers online on YOOX United Kingdom - 11502838HLLoretta Pettinari Ankle Boot - Women Loretta Pettinari Ankle Boots online on YOOX United Kingdom - 11474755BLCALIFERS Botines Mujer Piel Eleganza Collezione Ja300ho70-marron FASHION FOOTWEAR FOR WOMENPOLIN ET MOI 112553 FASHION FOOTWEAR FOR WOMEN , CUMBIA 30542 Marino WEDGE-HEEL SANDALS FOR WOMEN , BOSS Hugo Boss Solar Slide By Boss GreenMen/Women Nine West Cominback Boots Many styles , Helly Hansen STOCKHOLM - High-top trainers , Kurt Geiger BOURNEMOUTH - Classic ankle boots - brownJeffery West | Jeffery West Adamant glitter monk shoesAdidas adidas Originals NMD_R1 - Trainers - offwhite/redAdidas Pier One Ankle boots - dark purple , Men/Women ECCO Touch Strap Sandal Sandals Year-end salemen/women Eileen Fisher Ale Loafers The latest technology , Men/Women Nevados Klondike Mid WP Boots Modern technology , Chloé Sandals - Women Chloé Sandals online on YOOX United Kingdom - 44906143WE , Tod's Sneakers - Men Tod's Sneakers online on YOOX United Kingdom - 11300415WG , Womsh Sneakers - Women Womsh Sneakers online on YOOX United Kingdom - 11508745LFPuma Sneakers - Women Puma Sneakers online on YOOX United Kingdom - 11529039CLSuecomma Bonnie Sneakers - Women Suecomma Bonnie Sneakers online on YOOX United Kingdom - 11453183JFUma Parker Sneakers - Women Uma Parker Sneakers online on YOOX United Kingdom - 11148668XO , Hannibal Laguna Court - Women Hannibal Laguna Courts online on YOOX United Kingdom - 11541644WP , Casadei Ankle Boot - Women Casadei Ankle Boots online on YOOX United Kingdom - 11562419JFKult Domini Court - Women Kult Domini Courts online on YOOX United Kingdom - 11307013ME , Alexander McQueen Two Tone Puma Sneakers , Trendy The North Face Snowfuse , Naot Fiona Keep it modern and beautiful in the Naot Fiona.ladies Jeffrey Campbell Black Berliner Platforms Diverse new design , womens Prada Navy Patent Wedges Platforms impeccable , WOMEN Tahari Tan Sandals Win highly appreciated ,
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.