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.Citta' Di Milano Court - Women Citta' Di Milano Courts online on YOOX United Kingdom - 11487603TL , Get It Ankle Boot - Women Get It Ankle Boots online on YOOX United Kingdom - 11513017ESMax Bianco Ankle Boot - Women Max Bianco Ankle Boots online on YOOX United Kingdom - 11531668FN , Lorenzo Mari Court - Women Lorenzo Mari Courts online on YOOX United Kingdom - 11524907CAManolo Blahnik Black Open Toe Sandalswoman Franco Sarto Peach Wedges Let our products go out into the worldRamon Tenza Black and White Daisy with Watermelon Clear Heels Sandals , Jean-Michel Cazabat Black Jm Carly Strappy In Wolf SandalsKenneth Cole New York Chief Cap B , man/woman Schutz Milady Heels Selling new productsmen/women Nine West Shailyn Boots stable qualityFred de la Bretoniere Mules Colour: cognacMen/Women Yellow Box Pecan Sandals featureThe North Face ThermoBall? Après BootieGentle Souls by Kenneth Cole Noaman/woman Tata Italia Mules Colour: black Elegant style , Adidas Massimo Dutti Classic ankle boots - red , D sandal vega c sandals , pink, Geox , Fiorangelo Court - Women Fiorangelo Courts online on YOOX United Kingdom - 11511532MU , mens/womens G.H. Bass & Co. Erin Clogs & Mules Popular tide shoesAdidas Clarks POISE FREYA - Classic ankle boots - black , Fratelli Rossetti Loafers - Men Fratelli Rossetti Loafers online on YOOX United Kingdom - 11440562RRRoyal RepubliQ 720 HIKER OXFORD REFLECT SHOE - High-top trainers - grey reflective , Santoni Sneakers - Women Santoni Sneakers online on YOOX United Kingdom - 11528146BX , Ash Boots - Women Ash Boots online on YOOX United Kingdom - 11256420KTHunter Sneakers - Women Hunter Sneakers online on YOOX United Kingdom - 11182093NS , Hunter Ankle Boot - Women Hunter Ankle Boots online on YOOX United Kingdom - 11185128FI , Cinzia Araia Boots - Women Cinzia Araia Boots online on YOOX United Kingdom - 11493894VJ , BzlELpoa GIOSEPPO S015844204bpi MULES PARA MUJER , LifeStride Jenson Jet around town in style with the sleek and sensible Jenson bootie from LifeStride ,
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.