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.Giancarlo Paoli Ankle Boot - Women Giancarlo Paoli Ankle Boots online on YOOX United Kingdom - 11541809JQ , Daniela Mori Milano Sandals - Women Daniela Mori Milano Sandals online on YOOX United Kingdom - 11525161VC , Sergio Rossi Ankle Boot - Women Sergio Rossi Ankle Boots online on YOOX United Kingdom - 11456247NVCharlotte Olympia Ankle Boot - Women Charlotte Olympia Ankle Boots online on YOOX United Kingdom - 11536762PK , Liviana Conti Loafers - Women Liviana Conti Loafers online on YOOX United Kingdom - 11454668RRYKN S000700700bit PLATFORM SANDALS FOR WOMEN , Melissa ULTRAGIRL SWEET BOW Blush / GlitterShoe Bizz Paris Ankle Boot - Women Shoe Bizz Paris Ankle Boots online on YOOX United Kingdom - 11527473UL , Mm6 Maison Margiela Flip Flops - Women Mm6 Maison Margiela Flip Flops online on YOOX United Kingdom - 11114980WC , lady Nicholas Kirkwood Blue/White Platforms The newest style , lady Jimmy Choo Yellow Strappy Sandals environmentally friendlyWOMEN Naughty Monkey Gold Wedges First qualityman/woman Lucky Brand Madgey Sandals Great varietymens/womens Vaneli Ilex Heels Innovative design , Adidas LK Bennett FLORET - Classic heels - black , men's/women's Ted Baker Lylea Heels Full range of specifications , Men/Women Ted Baker Simeen 3 Loafers Fashion patternDsquared2 Boots - Men Dsquared2 Boots online on YOOX United Kingdom - 11515049CL , Attimonelli's Loafers - Men Attimonelli's Loafers online on YOOX United Kingdom - 11447973CV , man/woman Yellow Box Vow Sneakers & Athletic Yellow Box Elegant and solemn , man/woman SKECHERS Performance Serene Elation Sneakers & Athletic SKECHERS Performance Fine workmanshipASOS DESIGN | ASOS DESIGN Mamba pointed flat shoes in snake , Philippe Model Sneakers - Men Philippe Model Sneakers online on YOOX United Kingdom - 11482138EP , men's/women's Superfeet Outside Sandal 2 Sandals Let our goods go to the world , Roccobarocco Ankle Boot - Women Roccobarocco Ankle Boots online on YOOX United Kingdom - 11464428MP , Stuart Weitzman Espadrilles - Women Stuart Weitzman Espadrilles online on YOOX United Kingdom - 11035372EQFratelli Rossetti Sandals - Women Fratelli Rossetti Sandals online on YOOX United Kingdom - 11440671PL , riMd7rpM ECCO Sport Urban Lifestyle Tiehave fun ZAC Zac Posen BetteStuart Weitzman Silver Crystal Bling New In Box Sandals ,
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.