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.Bailarina By Ska Sneakers - Women Bailarina By Ska Sneakers online on YOOX United Kingdom - 11466712JTElisanero Ankle Boot - Women Elisanero Ankle Boots online on YOOX United Kingdom - 11454180EWStuart Weitzman Brushed Gold Heeled SandalsLADY dexflex Comfort Wedges New market , Vans U Old Skool Black White - Sneakers - Women Vans Sneakers online on YOOX United Kingdom - 11140354JN , MARIA MARE 66985 C40432 Rojo FASHION SANDALS FOR WOMEN , WOMENS Christian Louboutin Black Disqueen Platforms Cheap orderwomens Nike Womems Airmax New Sneakers Superior quality , womens Gold Formal Shoes Various current designs , Men/Women Aerosoles Times Square Loafers Complete specificationVero Moda VMELSA - Ankle boots , men/women Geox WRAYSSAABX1 Boots Fine processing , Slct suede leather cl bboy fab trainers , red, Pumamen's/women's PERLATO Slip-ons Colour: argent Excellent qualitymens/womens Buffalo T-bar sandals Valuable boutiqueCasadei Court - Women Casadei Courts online on YOOX United Kingdom - 11544160JP , men's/women's Crocs Swiftwater Cross-Strap Static Sneakers & Athletic Crocs King of quantityCesare Paciotti Boots - Men Cesare Paciotti Boots online on YOOX United Kingdom - 11506750XVDocksteps Court - Women Docksteps Courts online on YOOX United Kingdom - 11421748DS , Town Sandals - Women Town Sandals online on YOOX United Kingdom - 11520836PMHunter Loafers - Women Hunter Loafers online on YOOX United Kingdom - 11553033EL , Calpierre Court - Women Calpierre Courts online on YOOX United Kingdom - 11551385FR , Felmini Ankle Boot - Women Felmini Ankle Boots online on YOOX United Kingdom - 11266822GUBibi Lou Espadrilles - Women Bibi Lou Espadrilles online on YOOX United Kingdom - 11118167MJNike Purple 'free Flyknit' Running SneakersEZbGQlxg Salomon X Alp Spry GTXMake full use of materials Steve Madden Reflected , Ladies Just Cavalli Multi-color Az-3757 Sneakers Modern modelady Sam Edelman Black Bane Sandals Full specification , ladies Dolce&Gabbana Animal Print Pumps 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.