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.Sergio Rossi Ankle Boot - Women Sergio Rossi Ankle Boots online on YOOX United Kingdom - 44872564VHMiss Animalier® Flip Flops - Women Miss Animalier® Flip Flops online on YOOX United Kingdom - 11405436JB , George J. Love Sneakers - Women George J. Love Sneakers online on YOOX United Kingdom - 11403948DD , Jeffrey Campbell Court - Women Jeffrey Campbell Courts online on YOOX United Kingdom - 11140880IC , Mally Ankle Boot - Women Mally Ankle Boots online on YOOX United Kingdom - 11473266PP , New Balance Navy 530 In-line Trainer Sneaker Outer Space Thunder Sneakers , WOMEN Adrienne Vittadini Black Wedge Sandals Good worldwide reputation , STONEFLY Speedy Lady 1 LOW-TOP TRAINERS FOR WOMENMISS Givenchy Black Leather Sharklock Platforms Modern technology , ALDO Black White Gray High Heels SandalsGel-sonoma 3 running shoes , navy/pink, Asics , Adidas GANT KELLY - Slip-ons - pine greenman/woman Minnetonka Hello Kitty Fringe Boot Boots cheapman/woman Halston Heritage Tiana Bootie Boots Attractive fashion , Lidfort Loafers - Men Lidfort Loafers online on YOOX United Kingdom - 11508366OB , Marsèll Boots - Men Marsèll Boots online on YOOX United Kingdom - 11480051LM , Corneliani Loafers - Men Corneliani Loafers online on YOOX United Kingdom - 11437653INmens/womens Nine West Hadil 3 Heels Ranked first in its classCreative Loafers - Women Creative Loafers online on YOOX United Kingdom - 11529188UG , Cafènoir Sneakers - Women Cafènoir Sneakers online on YOOX United Kingdom - 44965432BIVans Sneakers - Women Vans Sneakers online on YOOX United Kingdom - 11576393QNManufacture D'essai Sandals - Women Manufacture D'essai Sandals online on YOOX United Kingdom - 11500097GJuIFC4Dm0 lady Charles David Sandals Free , Easy to use Kenneth Cole Reaction Kick-IngNew in stock Steve Madden Hestonn , Giesswein Alpen The Alpen slipper from Giesswein is loaded with style and comfort , Giuseppe Zanotti Black New Men Eu 42 Padded Strap High-top Lounge Leather Sneakers Sneakers , Nike White New - Flex Experience Run 2 - Sneakers , MISS Jessica Simpson Blue Heels Platforms special offerBalenciaga Blue/Red 2018 Triple S Trainers Sneakers
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.