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.F.Lli Bruglia Ankle Boot - Women F.Lli Bruglia Ankle Boots online on YOOX United Kingdom - 11525498AX , Leonardo Iachini Ankle Boot - Women Leonardo Iachini Ankle Boots online on YOOX United Kingdom - 11172013NQDolce & Gabbana Loafers - Men Dolce & Gabbana Loafers online on YOOX United Kingdom - 11508165HLAndrea Morelli Sneakers - Women Andrea Morelli Sneakers online on YOOX United Kingdom - 11301392HQALMA EN PENA 488-alma En Pena BOTíN PLANO DE MUJER , LE COQ SPORTIF Grandville LOW-TOP TRAINERS FOR WOMEN , Ladies Guess Black Gwsavor Wedges Clever and practical , Rip Curl Reefer 1.5mm Spilt T Boot , MARPEN Stars Rosa FASHION SLIPPERS FOR WOMEN , Men/Women Tahari Favor Heels High security , Kenneth Cole Reaction Look Beyond 2 , men's/women's Sam Edelman Chandler Boots High quality and economy , Men/Women PATRIZIA Peinado Boots Known for its beautiful qualityman/woman Lazamani Sandals Colour: brown High-quality materialsInvicta Sneakers - Men Invicta Sneakers online on YOOX United Kingdom - 11572270LL , Ea7 Sneakers - Men Ea7 Sneakers online on YOOX United Kingdom - 11173675ML , Lowa SAN FRANCISCO GTX - Walking trainers - dunkelbraun , mens/womens Tamaris Mila 1-1-27304-20 Clogs & Mules Exquisite (middle) workmanship , Tangerine Loafers - Women Tangerine Loafers online on YOOX United Kingdom - 11473157VLHogan Sneakers - Women Hogan Sneakers online on YOOX United Kingdom - 11567549JW , Prezioso Court - Women Prezioso Courts online on YOOX United Kingdom - 11449797PPCafènoir Sandals - Women Cafènoir Sandals online on YOOX United Kingdom - 11439817TRHogan Sneakers - Women Hogan Sneakers online on YOOX United Kingdom - 11539707PGEbarrito Ankle Boot - Women Ebarrito Ankle Boots online on YOOX United Kingdom - 11548586MHGuess Ankle Boot - Women Guess Ankle Boots online on YOOX United Kingdom - 11461449QV , Elegant and sturdy packaging Mizuno Wave Lightning Z4 , Optimal price Via Spiga Ryder , The highest quality material Stacy Adams AckerlyModerate cost Spenco Yumi PlusWOMEN Dior White/Clear Platforms Practical and economical ,
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.