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.Wally Walker Ankle Boot - Women Wally Walker Ankle Boots online on YOOX United Kingdom - 11467923WD , Vans Ua Old Skool - Sneakers - Men Vans Sneakers online on YOOX United Kingdom - 11335258RL , Angela George Boots - Women Angela George Boots online on YOOX United Kingdom - 11216316GO , Stuart Weitzman Tan Nubuc Merge Sandals , Idée De Pointe Ankle Boot - Women Idée De Pointe Ankle Boots online on YOOX United Kingdom - 11135594RBVans U Sk8-Hi Slim Nintendo Console - Sneakers - Women Vans Sneakers online on YOOX United Kingdom - 11066770JV , New Balance 580 Riviera Pack - Sneakers - Women New Balance Sneakers online on YOOX United Kingdom - 44989957MKNike Air Huarache Drift Br - Sneakers - Men Nike Sneakers online on YOOX United Kingdom - 11490050HJ , womens Christian Louboutin Black Studded Sneakers New style , womens Christian Louboutin Formal Shoes new entry , MISS Sam Edelman Nwot Platforms Optimal priceman/woman Giorgio Brutini Ward Oxfords flagship storeDune London SIESTA - Boots Colour: black , Men/Women Bella-Vita Nic-Italy Sandals Global sales , mens/womens Madden Girl Ariizona Boots bargainD jadalis c high heeled leather sandals , sand, GeoxYab Sneakers - Men Yab Sneakers online on YOOX United Kingdom - 11278622WI , Vans | Vans Exclusive khaki And Orange Mix Checkerboard Authentic Sneakers , Elena Iachi Sneakers - Men Elena Iachi Sneakers online on YOOX United Kingdom - 11570333KB , Il Calzolaio Boots - Men Il Calzolaio Boots online on YOOX United Kingdom - 11269408NC , Puma FUTURE 2.3 NETFIT FG/AG - Moulded stud football boots - black/shocking orangeLagoa Sandals - Women Lagoa Sandals online on YOOX United Kingdom - 11417118PVBuscemi Sneakers - Women Buscemi Sneakers online on YOOX United Kingdom - 11426302BQLoriblu Ankle Boot - Women Loriblu Ankle Boots online on YOOX United Kingdom - 11521546RIHogan Ankle Boot - Women Hogan Ankle Boots online on YOOX United Kingdom - 11230286XHIn short supply Kelsi Dagger Brooklyn SimonDifferent goods Harley-Davidson Talley RidgeFreewaters Becca Keep your style nice and breezy like a calm summer wind in the laid-back Freewaters Becca sandal!Balenciaga White Marble Print High Top Sneaker Sneakerswomen Tory Burch Tan Macy Wedges Good quality
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.