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.Dolce & Gabbana Sandals - Women Dolce & Gabbana Sandals online on YOOX United Kingdom - 11362703DA , Cafènoir Ankle Boot - Women Cafènoir Ankle Boots online on YOOX United Kingdom - 11478270UIWOMEN MIA Camel Wedges Excellent featuresyJuAyZuB Leather trainers , white, ConversePas De Rouge Ankle Boot - Women Pas De Rouge Ankle Boots online on YOOX United Kingdom - 11337851XG , Rockport Cobb Hill Collection Cobb Hill Gratasha Panel BootWOMEN Gianni Bini Leopard Platforms Modern and stylish fashion , Jeffrey Campbell Black Rune Goat Leather In SandalsWOMEN Pedro Garcia Gray Wedges High quality productsTory Burch Black Lowell Flat Slide Sandalsmen's/women's Korks Linora Sandals Clever and practical , men's/women's Nina Elvira Heels Great variety , Cole Haan Dawes Grand Plain Toe , men/women Adidas Adizero Boston 7 Shoes Schuhe Excellent stretchingmens/womens Jessica Simpson Korva Sandals Big clearance sale , Asics Tiger LYTE-TRAINER - Trainers - peacoat , A.Testoni Loafers - Men A.Testoni Loafers online on YOOX United Kingdom - 11540229HT , Royal RepubliQ DORIC UNBOUND DERBY SHOE - Trainers - winemen's/women's Charlotte Olympia Marcella 100 Heels The highest quality material , N° 21 Sneakers - Men N° 21 Sneakers online on YOOX United Kingdom - 11533274KJCafènoir Sandals - Women Cafènoir Sandals online on YOOX United Kingdom - 11448966TOHogan Rebel Sneakers - Women Hogan Rebel Sneakers online on YOOX United Kingdom - 11567552GBJil Sander Court - Women Jil Sander Courts online on YOOX United Kingdom - 11326505QIDiadora Heritage Sneakers - Men Diadora Heritage Sneakers online on YOOX United Kingdom - 11491668GPPrada Black Criss-cross Slingback Patent Sandalsspecial function Charlotte Olympia Kitty Flats , Botkier Pina Dressed up or down, pack a style punch with the Botkier Pina mule , LifeStride Pearla Discover your elegant side with the sleek design of the Pearla pump by LifeStride! , womens Ella Moss Beige Platforms New products in 2359Ladies Cole Haan Silver Embellished Wedges product quality
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.