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.Sgn Giancarlo Paoli Sandals - Women Sgn Giancarlo Paoli Sandals online on YOOX United Kingdom - 11461001DL , Chiara Ferragni Open-Toe Mules - Women Chiara Ferragni Open-Toe Mules online on YOOX United Kingdom - 11492881PLLoretta Pettinari Loafers - Women Loretta Pettinari Loafers online on YOOX United Kingdom - 11474706SP , RIPOSELLA 40923 WEDGE-HEEL SANDALS FOR WOMENChinese Laundry Snake Print Cl SandalsUnder Armour Ua W Charged Escape - Sneakers - Women Under Armour Sneakers online on YOOX United Kingdom - 11446847DDTwin-Set Simona Barbieri Ankle Boot - Women Twin-Set Simona Barbieri Ankle Boots online on YOOX United Kingdom - 11484957GPMango NANTES - Classic ankle boots Colour: blackNew Look MECKER - Slip-ons Colour: blackAvirex Espadrilles - Men Avirex Espadrilles online on YOOX United Kingdom - 11549976ERAquarelle Sandals - Women Aquarelle Sandals online on YOOX United Kingdom - 11473192XU , Casadei Court - Women Casadei Courts online on YOOX United Kingdom - 11090727HNCafènoir Loafers - Women Cafènoir Loafers online on YOOX United Kingdom - 11561157CQ , Schutz Sandals - Women Schutz Sandals online on YOOX United Kingdom - 11439752DL , Prada Sport Sneakers - Women Prada Sport Sneakers online on YOOX United Kingdom - 11290364QD , Marsèll Ankle Boot - Women Marsèll Ankle Boots online on YOOX United Kingdom - 11222422JEVicenza) Ankle Boot - Women Vicenza) Ankle Boots online on YOOX United Kingdom - 11560996HQSusana Traca Sandals - Women Susana Traca Sandals online on YOOX United Kingdom - 11555102XLSkechers Gray Knitted Golf Sneakers Sneakers , MISS Giuseppe Zanotti Apricot Sandals durability , 6Mc8IfEr Dockers Hawley Cap Toe OxfordGood quality SKECHERS 65406-skechers LOW-TOP TRAINERSModerate cost Corral Boots C3373 , King of quantity Bed Stu MarshalLaredo Flutter The Laredo Flutter cowgirl bootie adds a touch of whimsical Western style to your lookMagnanni Saffron The Saffron is your new go-to oxford, for work, play and everything in between.woman Silver Snake Skin Formal Shoes Modern and stylish fashion , adidas Gray W/ Red Detail Nmd S79160 Sneakers , women Stuart Weitzman 00 Sandals High quality products , Rebecca Minkoff Creme *new* Tristen Snakeskin Sandals
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.