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.U.S.Polo Assn. Ankle Boot - Women U.S.Polo Assn. Ankle Boots online on YOOX United Kingdom - 11516256LFIsabel Marant Flip Flops - Women Isabel Marant Flip Flops online on YOOX United Kingdom - 11337737IT , Alberto Guardiani Loafers - Women Alberto Guardiani Loafers online on YOOX United Kingdom - 11252991RMKeep Originals Sneakers - Women Keep Originals Sneakers online on YOOX United Kingdom - 11512144DC , Primadonna Ankle Boot - Women Primadonna Ankle Boots online on YOOX United Kingdom - 11495867LU , Catherine Malandrino Black Beige Sneaker Sneakers , Defy Varsity Women’s Sneakers | Ribbon Red-Metallic Gold , Nike Air Vapormax Flyknit 2 - Sneakers - Men Nike Sneakers online on YOOX United Kingdom - 11572101AF , Nike Air Huarache Run Premium - Sneakers - Men Nike Sneakers online on YOOX United Kingdom - 11407159QCLiu ?Jo Shoes Sandals - Women Liu ?Jo Shoes Sandals online on YOOX United Kingdom - 44951416LEOTAZUA 7706 Tallas Especiales FASHION FOOTWEAR FOR WOMENladies SCHUTZ Brushed Sand Darby Sandals Nice colorman/woman Nine West Moshpit Heels Maintenance capabilityMelvin & Hamilton KATRIN - Ankle boots Colour: brown , mens/womens El Naturalista Alhambra NG17 Boots Special purchaseTod's Loafers - Men Tod's Loafers online on YOOX United Kingdom - 11297064AMmen/women New Balance Razah Sneakers & Athletic New Balance Vintage tide shoes , men's/women's River Island Mules Colour: gold Clever and practical , Gold Brothers Loafers - Men Gold Brothers Loafers online on YOOX United Kingdom - 11537547JCStokton Sneakers - Women Stokton Sneakers online on YOOX United Kingdom - 11361918WF , Kanna Sandals - Women Kanna Sandals online on YOOX United Kingdom - 11571141AG , Onako' Ankle Boot - Women Onako' Ankle Boots online on YOOX United Kingdom - 11530981RH , Giuseppe Zanotti Loafers - Women Giuseppe Zanotti Loafers online on YOOX United Kingdom - 11397826JBWhat For Loafers - Women What For Loafers online on YOOX United Kingdom - 11540912VTJimmy Choo Court - Women Jimmy Choo Courts online on YOOX United Kingdom - 11478174XNKing of quantity Bed Stu MarshalALDO Gwirawen You'll enjoy every day of sunshine in the ALDO Gwirawen sandalWomen's Fendi Tan Wooden Platforms Special promotions at the end of the yearWOMENS Munro American Black Luisa Wedges Sale ItalyMISS Straw and Multi Sandals Modern technology
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.