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.Rupert Sanderson Court - Women Rupert Sanderson Courts online on YOOX United Kingdom - 11485563UAPITILLOS 2731 FASHION FOOTWEAR FOR WOMEN , Christian Louboutin Brown Beige Cream Black Rantus Orlato Pony Leopard Flat Hi High Top Sneakers 36.5 Sneakers , Nike Air Max 1 - Sneakers - Men Nike Sneakers online on YOOX United Kingdom - 11504717XTWomen's Tory Burch Black Moore Sandals At a lower pricewomen Salvatore Ferragamo Tan Sandals New products in 2268 , Nike Black/ Metallic Accents Lebron Xii Elites Sneakers , Christian Louboutin Fusain/Black Floque Spikes 3160092 Sneakersman/woman Lucky Brand Adymaris Sandals best seller , Puma BASKET HEART PATENT - Trainers , men's/women's Dolce Vita Jorden Boots TRUE , Gentle Souls by Kenneth Cole BinxAdidas El Naturalista MARINE - Platform sandals - blackSteve Madden SAINE - Classic ankle boots - black , men/women Circa Lopez 13 Sneakers & Athletic Circa auctionmen's/women's Sanuk Yoga Slinged Up Sandals Most practical , man/woman Vans Classic Slip-On 98 DX Sneakers & Athletic Vans Reliable performance , Henderson Sneakers - Women Henderson Sneakers online on YOOX United Kingdom - 11452438VUHogan Boots - Women Hogan Boots online on YOOX United Kingdom - 11536940CV , Kallistè Sandals - Women Kallistè Sandals online on YOOX United Kingdom - 11467431DNSteve Madden Sandals - Women Steve Madden Sandals online on YOOX United Kingdom - 11456625IRNero Giardini Boots - Women Nero Giardini Boots online on YOOX United Kingdom - 11564256VBSalvatore Caputo Court - Women Salvatore Caputo Courts online on YOOX United Kingdom - 11472681CD , Vic Matiē Boots - Women Vic Matiē Boots online on YOOX United Kingdom - 11239809JX , N° 21 Court - Women N° 21 Courts online on YOOX United Kingdom - 44953983TO , Carrucci Mangione Make everyday attire look magnificent with the Carrucci Mangione brogue oxfordafWOsFkj WOMENS White Dynalast Sneakers bestsellMISS Dior Gold Python Leather Platforms The newest style , Ladies Jeffrey Campbell Red Enable Platforms Latest technology , ladies Isabel Marant Black Studded Sandals Immediate delivery ,
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.