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.Ubi Major Ankle Boot - Women Ubi Major Ankle Boots online on YOOX United Kingdom - 11467403JM , Colors Of California Sandals - Women Colors Of California Sandals online on YOOX United Kingdom - 11471520FMEmporio Armani Ballet Flats - Women Emporio Armani Ballet Flats online on YOOX United Kingdom - 11443759ILSilvia Rossini Court - Women Silvia Rossini Courts online on YOOX United Kingdom - 11502946TH , Gusto Ankle Boot - Women Gusto Ankle Boots online on YOOX United Kingdom - 11520380JS , MISS Fabiana Filippi Sneakers Sneakers Make full use of materials , WOMEN Tory Burch Natural Thora Sandals special purchasewomen Sam Edelman Camo Adora Sandals Reasonable priceIGI AND CO 8781 ZAPATILLA CON PLATAFORMANike Gray Pink Silver Alvord 10 Sneakers , Ladies Purple Iso Fit Sneakers Call firstmens/womens Munro Yuma Heels Valuable boutique , Fred Perry | Fred Perry Kingston Leather Sneakers in BlackBOSS ATHLEISURE STORM RUNN ACT - Trainers - blackUndercover Boots - Men Undercover Boots online on YOOX United Kingdom - 11551835VP , Nostrasantissima Boots - Men Nostrasantissima Boots online on YOOX United Kingdom - 11461075SD , Mizuno WAVE MUJIN 5 GTX - Trail running shoes Colour: estate blue/silver/hawaiian ocean , Leather Crown Sneakers - Men Leather Crown Sneakers online on YOOX United Kingdom - 11232307DFmen's/women's adidas Running adiZero Long Jump Sneakers & Athletic adidas Running Upper materialMalìparmi Court - Women Malìparmi Courts online on YOOX United Kingdom - 44612993QSSara Sandals - Women Sara Sandals online on YOOX United Kingdom - 11460469NHGioseppo Flip Flops - Women Gioseppo Flip Flops online on YOOX United Kingdom - 11336324HFChie Mihara Sandals - Women Chie Mihara Sandals online on YOOX United Kingdom - 11192262JD , LHZmuuZM CUEMEND 6558-cuemend ZAPATILLA CON PLATAFORMAeconomic Arc'teryx Bora Mid GTXGiuseppe Zanotti New Hair Calf Leather High Top Gold Hardware Double Zip Sneakers 39 Retail 325+tax Sold Sneakers , YmK9dVZT ladies Roberto Cavalli Platforms diversity , adidas By Stella McCartney Peach Nude Running Cc Sonic Trainers / Sneakers SneakersDonald J. Pliner Pink ( Peach) Wedges Toe Loop Flip Flop Slides Sandals , ladies Burberry Pink Wedge Espadrilles Sandals Authentic guarantee
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.