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.Paola Ferri Ankle Boot - Women Paola Ferri Ankle Boots online on YOOX United Kingdom - 11225973FGRoberto Della Croce Boots - Women Roberto Della Croce Boots online on YOOX United Kingdom - 11529511KIJimmy Choo Ankle Boot - Women Jimmy Choo Ankle Boots online on YOOX United Kingdom - 11488541LHRebecca Minkoff Sneakers - Women Rebecca Minkoff Sneakers online on YOOX United Kingdom - 11449360BNOpen Closed Loafers - Women Open Closed Loafers online on YOOX United Kingdom - 11514548LTOnitsuka Tiger MEXICO 66 White / Blue / Redwoman Enzo Angiolini Gold Formal Shoes High quality , Chinese Laundry Cream Silk Pearls Slides Sandals , Ladies Givenchy Multicolor/White Robertha Sandals Full specification , men/women Frye Miranda Gladiator Sandals Fine artmens/womens LifeStride Jamie Boots Online Shopping , Peter Kaiser ARJONA - Boots , ASOS DESIGN | ASOS DESIGN Mai Tai leather broguesMen/Women Tamaris Platform sandals Charming design , DKNY CLEMSON - Slip-ons Colour: black with logoCult Boots - Men Cult Boots online on YOOX United Kingdom - 11467743BHHogan Sneakers - Men Hogan Sneakers online on YOOX United Kingdom - 11289159JD , Adidas Skechers ON THE GO JOY - Winter boots - dark taupe , mens/womens Tommy Hilfiger Mckenzie Sneakers & Athletic Tommy Hilfiger Clearance sale , Leather Crown Sneakers - Men Leather Crown Sneakers online on YOOX United Kingdom - 11384815EMSalvatore Ferragamo Sneakers - Men Salvatore Ferragamo Sneakers online on YOOX United Kingdom - 11544055UPMen/Women PUMA Basket Classic Gum Deluxe Sneakers & Athletic PUMA New products in 2018 , men/women G by GUESS Ocara3 Sneakers & Athletic G by GUESS Innovative design , Valleverde Sandals - Women Valleverde Sandals online on YOOX United Kingdom - 11547415SHPollini Ankle Boot - Women Pollini Ankle Boots online on YOOX United Kingdom - 11446834VH , Various latest designs Rieker 46778 Sina 78Great variety Miz Mooz BloomMISS Stuart Weitzman Black Ew97254 Platforms a great varietywomen Tory Burch Gold Platforms Easy to clean surfacewomens Christian Louboutin Nude Architek Pumps auction
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.