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.Vic Matiē Ballet Flats - Women Vic Matiē Ballet Flats online on YOOX United Kingdom - 11118821PE , O.X.S. Rubber Soul Boots - Men O.X.S. Rubber Soul Boots online on YOOX United Kingdom - 11554279EO , PORRONET 2429 WEDGE-HEEL SANDALS FOR WOMENwomens J.Crew Heels Wedges Modern technology , Angela Chiara Venezia Ankle Boot - Women Angela Chiara Venezia Ankle Boots online on YOOX United Kingdom - 11482272FBBalenciaga Yellow / White / Red Triple S Leather Sneaker Women Sneakers , lady Tory Burch Blue Golden Wedges Sale online storewomen Salvatore Ferragamo Tan Sandals New products in 2268CLARKS Glick Darby ZAPATO PLANO PARA MUJER , woman Easy Spirit Black Sandals Preferred materialmen's/women's Naturalizer Harper Heels the most economical , men's/women's El Naturalista Koi N5091 Sandals fashionable , Kennel & Schmenger Kiko Embroidered Boot , Adidas Desigual WOMAN PRINT - Sports shoes - peacoat , Ted Baker LINAEY - High heeled boots Colour: blackMen/Women J. Renee Charise Heels Seasonal hot sale , men's/women's Marc Fisher LTD Yamini Sandals various kindsAsics Sneakers - Men Asics Sneakers online on YOOX United Kingdom - 11360644MR , Karhu Sneakers - Men Karhu Sneakers online on YOOX United Kingdom - 11264066CBAdidas Bianco NOOS - High heeled ankle boots - blackmen's/women's FitFlop Halo Toe Thong Sandals Sandals New in stock , Men/Women SKECHERS Performance GOrun Ride 7 Sneakers & Athletic SKECHERS Performance Different stylesIcône Sandals - Women Icône Sandals online on YOOX United Kingdom - 11432135SFBruno Bordese Sneakers - Women Bruno Bordese Sneakers online on YOOX United Kingdom - 11534646AAGiampaolo Viozzi Boots - Women Giampaolo Viozzi Boots online on YOOX United Kingdom - 11532962DQ , Steve Madden Sneakers - Women Steve Madden Sneakers online on YOOX United Kingdom - 11467148HNSpaziomoda Ankle Boot - Women Spaziomoda Ankle Boots online on YOOX United Kingdom - 11448351JIPleasant appearance Birkenstock London Soft FootbedPerfect processing REEBOK Cn4562-reebok LOW-TOP TRAINERS , Complete specification Bacco Bucci Capi
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.