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.Stefano Gamba Open-Toe Mules - Women Stefano Gamba Open-Toe Mules online on YOOX United Kingdom - 11354296HAman/woman Earth Callisto Sneakers & Athletic Earth Highly appreciated and widely trusted in and out , Gianni Marra Sandals - Women Gianni Marra Sandals online on YOOX United Kingdom - 11103372SKMTNG 69187 Vita C39331 Negro LOW-TOP TRAINERS FOR WOMEN , SENDRA BOOTS 13409 FASHION FOOTWEAR FOR WOMEN , MARIA JAEN 6069 FASHION BALLERINAS FOR WOMEN , Donald J. Pliner Black Strappy Mesh Sandals , ladies Black Leather Platform Wedges quality Queenmen's/women's Anne Klein Kamy Flats Fast delivery , Adidas Gabor Ballet pumps - ocean , Bianco CLEAN KING - Trainersmens/womens Geox WAMELIAST21 Boots Wholesale trade , Cream SOFIA - Ankle bootsNike SB BRUIN MAX VAPOR - Trainers - black/cool grey-white-white , Men/Women Crocs Crocband Clog Clogs & Mules Fine wildConverse Chuck Taylor? All Star? Ox - Perf Suede , men/women Tretorn Eve3 Sneakers & Athletic Tretorn fashionable , man/woman Rieker R0572 Kelani 72 Boots high quality , mens/womens Rebecca Minkoff Mika Clogs & Mules cheapDsquared2 Sandals - Men Dsquared2 Sandals online on YOOX United Kingdom - 11372027HSLakai Sneakers - Men Lakai Sneakers online on YOOX United Kingdom - 11461952BL , Bikkembergs Sneakers - Men Bikkembergs Sneakers online on YOOX United Kingdom - 11451016LNASOS DESIGN | ASOS DESIGN Wide Leg Kassidy heeled over the knee bootsKallistè Court - Women Kallistè Courts online on YOOX United Kingdom - 11471893GH , Dsquared2 Sandals - Women Dsquared2 Sandals online on YOOX United Kingdom - 11409437KG , Rick Owens Sneakers - Women Rick Owens Sneakers online on YOOX United Kingdom - 44736660WJ , Vic Matiē Sandals - Women Vic Matiē Sandals online on YOOX United Kingdom - 11119626EL , Zinda Flip Flops - Women Zinda Flip Flops online on YOOX United Kingdom - 11459845FO , Various styles Adrianna Papell Teagan , Keen Shanti The KEEN Shanti sandal is the ultimate summer shoe, offering lightweight comfort for active summer days
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.