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.Isabel Marant Étoile Sandals - Women Isabel Marant Étoile Sandals online on YOOX United Kingdom - 11543583XSChie Mihara Kilo - Court - Women Chie Mihara Courts online on YOOX United Kingdom - 11547727CB , WOMEN Christian Louboutin Black Highness Platforms Excellent performanceLadies Rampage Tan Brown Nude Wedges Wholesale , Rockport Land Boulevard Cross Slide Flatform Sandal , men/women Lucky Brand Harleen Boots Amoyman/woman Cordani Beckie Boots Excellent stretchingman/woman Nina Kiyrah Flats Aesthetic appearance , Flip flops , dark grey, CrocsDC Pure High-Top WC TX LE , men/women Minnetonka Cowboy/Biker boots New marketMen/Women CL By Laundry Hazel Flats high quality , mens/womens David Tate Ritz Heels Fashion versatile shoes , Tod's Sneakers - Women Tod's Sneakers online on YOOX United Kingdom - 11366724ABDorateymur Loafers - Women Dorateymur Loafers online on YOOX United Kingdom - 11463721WSPrada Espadrilles - Men Prada Espadrilles online on YOOX United Kingdom - 11510278AM , Doucal's Boots - Men Doucal's Boots online on YOOX United Kingdom - 11504588UP , Prada Loafers - Men Prada Loafers online on YOOX United Kingdom - 11549871XJNew Look Wide Fit WIDE FIT ROWETTA - High heelsGiuseppe Zanotti Sneakers - Men Giuseppe Zanotti Sneakers online on YOOX United Kingdom - 11394264DX , Ea7 Sneakers - Women Ea7 Sneakers online on YOOX United Kingdom - 11501206XJ , Dsquared2 Sneakers - Women Dsquared2 Sneakers online on YOOX United Kingdom - 11429189NHAnna F. Court - Women Anna F. Courts online on YOOX United Kingdom - 11535509LU , Emporio Armani Loafers - Women Emporio Armani Loafers online on YOOX United Kingdom - 11570786LD , Ruco Line Sneakers - Men Ruco Line Sneakers online on YOOX United Kingdom - 11481057OHB.O.C. Black Like New Comfort SandalsLush design MISS Black/Purple/Orange Sneakers finishingRockport Rayna Rain or shine, make sure you're still looking fierce and fine in the Rayna boot , WOMEN Tory Burch Pink Sandals Elegant and robust packaging , women Christian Louboutin White/Lilac/Lavender/Purple Strappy Sandals Good design ,
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.