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.Mauro Fedeli Ankle Boot - Women Mauro Fedeli Ankle Boots online on YOOX United Kingdom - 11507705BE , Vic Matiē Ankle Boot - Women Vic Matiē Ankle Boots online on YOOX United Kingdom - 11457603SURed Creatyve Loafers - Women Red Creatyve Loafers online on YOOX United Kingdom - 11458740CD , Reebok Black White Gold Rare Piano Keys Leather Sneakers Musician's Delight SneakersLADY Jeffrey Campbell Platforms Let our goods go out into the worldStuart Weitzman Black New Nudist Crystal Strap W/Low Heel 36.5 Sandals , Tory Burch Black Laney Embellished Runner SneakersEbernon low trainers , white, Nike , Matisse Coconuts by Matisse - Perryman/woman G by GUESS Prezident Boots Various latest designsmen/women GUESS Owina Heels At a lower priceAdidas ALOHAS AGNES - Mules - black , Stuart Weitzman MIRA - Heeled mules Colour: neroCasadei Sandals - Women Casadei Sandals online on YOOX United Kingdom - 11515436BWHogan Sneakers - Men Hogan Sneakers online on YOOX United Kingdom - 11484428HX , Dr Martens | Dr Martens Willis White Leather Studded Flat ShoesMen/Women Vans Classic Slip-On? Sneakers & Athletic Vans Famous store , Etro Flip Flops - Men Etro Flip Flops online on YOOX United Kingdom - 11488996EJ , Zinda Court - Women Zinda Courts online on YOOX United Kingdom - 11563235GH , Rodo Court - Women Rodo Courts online on YOOX United Kingdom - 11416762DR , L'f Shoes Loafers - Women L'f Shoes Loafers online on YOOX United Kingdom - 11188413PRManuel Barceló Sandals - Women Manuel Barceló Sandals online on YOOX United Kingdom - 11534806XPFitflop Flip Flops - Women Fitflop Flip Flops online on YOOX United Kingdom - 11575677NJ , Dr. Scholl's Silver Jamie 46347f4025 Sneakersa8npU0uu Two24 by Ariat Cypress Crazy , Aesthetic appearance Gordon Rush Ingram , womens Valentino Beige/Light Pink Espadrilles Wedges Different stylesladies ALAÏA Black Huf335 Sandals Popular tide shoes , Nike Coral Floral Print Roshe Tan SneakersWOMEN Valentino Bow-embellished Nude Pumps Big sale
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.