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.Cesare Paciotti 4Us Loafers - Women Cesare Paciotti 4Us Loafers online on YOOX United Kingdom - 11474863TL , Ladies Versace Multi Platforms First quality , Steven By Steve Madden Sneakers - Women Steven By Steve Madden Sneakers online on YOOX United Kingdom - 11361744XV , Kendall + Kylie Ankle Boot - Women Kendall + Kylie Ankle Boots online on YOOX United Kingdom - 11507336NS , adidas Purple & Yellow Pure Boost Athletic ShoesWOMEN Ralph Lauren Brown Sandals Wedges Customer first , WOMENS Prada Women's Trainers Sneakers Sneakers Long-term reputation , Women's John Fluevog Cream Pumps For your choiceLACOSTE Carnaby Evo Bl 1 LOW-TOP TRAINERSALDO VILFREDO - Espadrilles - navy , Dune London LOVEYDOVEY - Mules Colour: blushmen/women Naot Levanto Boots Order welcome , HUB PANAMA - High-top trainers , men/women Adidas Kakari Elite SG Boots Schuhe flagship store , Men/Women Born Jem Boots Adequate supply and timely deliveryFrau Boots - Men Frau Boots online on YOOX United Kingdom - 11456948WSConverse CHUCK TAYLOR ALL STAR OX - Trainers - washed denimmen's/women's Sanita Original Oriana Clogs & Mules leading the fashionmen's/women's Tommy Hilfiger Pearson Sneakers & Athletic Tommy Hilfiger durableAdidas Originals Sneakers - Men Adidas Originals Sneakers online on YOOX United Kingdom - 11496846FDTod's Court - Women Tod's Courts online on YOOX United Kingdom - 11016948AXSergio Rossi Court - Women Sergio Rossi Courts online on YOOX United Kingdom - 11285268UM , Philippe Model Sneakers - Women Philippe Model Sneakers online on YOOX United Kingdom - 11568640IUMiista Ivon - Sandals - Women Miista Sandals online on YOOX United Kingdom - 11458641UBDolce&Gabbana Gold Knot Peep Toe Sandals , WOMEN Black Gladiator Sandals Beautiful art , Good world reputation Jessica Simpson PierceyLADY BCBG Paris Gold/Snake Skin Wedges Exquisite (medium) workmanshipStuart Weitzman Pink Studded Slide Kitten Heels Sandals , woman Saint Laurent Beige Platforms Practical and economical
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.