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.Jean-Michel Cazabat Ankle Boot - Women Jean-Michel Cazabat Ankle Boots online on YOOX United Kingdom - 11521532MV , Love Moschino Ankle Boot - Women Love Moschino Ankle Boots online on YOOX United Kingdom - 11451370NTAsh Ballet Flats - Women Ash Ballet Flats online on YOOX United Kingdom - 11525609FRy8lTg2ar man/woman Earth Dione Heels excellentGeorge J. Love Ankle Boot - Women George J. Love Ankle Boots online on YOOX United Kingdom - 11545063IF , Álvaro González Flip Flops - Women Álvaro González Flip Flops online on YOOX United Kingdom - 11235228VE , MARIA MARE Df707 Cuero FASHION FOOTWEAR FOR WOMENladies Steve Madden Bambat Wedges Nice and charmingwomen Buscemi Olive Hi Top Sneakers Low pricelady Tory Burch Tan Thong Sandals Latest technologyBRUNATE 68045 WEDGE ANKLE BOOTS FOR WOMEN , Ladies Tom Ford Formal Shoes Cheap order , men/women Clarks Corsio Amelia Sandals Fair priceLove Moschino Winter boots Colour: rosso , men's/women's ALDO Balata Sandals for you to chooseBaldinini Loafers - Men Baldinini Loafers online on YOOX United Kingdom - 11554726CUmen's/women's Nine West Dorey Heels We have won praise from our customers.men/women ECCO Scinapse Premium High Sneakers & Athletic ECCO Innovative design , Men/Women Ecco Performance Biom Fjuel Racer Sneakers & Athletic Ecco Performance Attractive fashionAlbano Sandals - Women Albano Sandals online on YOOX United Kingdom - 11511919UTSpaziomoda Sandals - Women Spaziomoda Sandals online on YOOX United Kingdom - 11572841KM , Santoni Ankle Boot - Women Santoni Ankle Boots online on YOOX United Kingdom - 11477834GN , ladies Anyi Lu Black Wedges tender , First grade in its class Rieker D7364 Milla 64Let our products go to the world Patricia Nash FlairBernardo Grace Step out with your sleek style in these Bernardo Grace sandals , C2c8LtUb Ladies Longchamp Sandals Buy online , Tory Burch Yellow Selma Leather Flip Flops Wedge Sandals , woman Manolo Blahnik Hot Pink Sandals Optimal price , Børn Black Slides with Dual Buckles Sandals
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.