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.Windsor Smith Ankle Boot - Women Windsor Smith Ankle Boots online on YOOX United Kingdom - 11477765HM , Isabel Marant Ankle Boot - Women Isabel Marant Ankle Boots online on YOOX United Kingdom - 11337748BM , GEOX D642na-geox LOW-TOP TRAINERS FOR WOMENKatie Grand Loves Hogan Sneakers - Women Katie Grand Loves Hogan Sneakers online on YOOX United Kingdom - 11298442NAGolden Goose Deluxe Brand Sneakers - Women Golden Goose Deluxe Brand Sneakers online on YOOX United Kingdom - 11465405NB , Vince Camuto Porcelain Women's Endell Leather Sandals , man/woman bernie mev. Harriet Flats Aesthetic appearance , Unisa CUBERO - Platform sandals Colour: oceanMen/Women Dolce Vita Howie Heels durablemen/women Dolce Vita Maura Flats quality , Men/Women Trotters Accent Loafers Reputation first , Adidas Brenda Zaro CARLA - Ballet pumps - neromen's/women's Ted Baker Rogrr 2 Oxfords Exquisite (middle) workmanshipPublic Desire | Public Desire Ziggy Embellished Heeled SandalsASOS DESIGN | ASOS DESIGN Penley Slingback High Heels , men's/women's New Balance SD100v1 Sprint Spike Sneakers & Athletic New Balance newmens/womens Easy Spirit Travelport Clogs & Mules Every item described is available , mens/womens CC Corso Como Coral Clogs & Mules Exquisite (middle) workmanship , men/women Nine West Huebart Clogs & Mules Don't worry when shoppingMen/Women Frye Ivy Mule Sneakers & Athletic Frye Beautiful designAlbano Court - Women Albano Courts online on YOOX United Kingdom - 11543924XI , Church's Loafers - Women Church's Loafers online on YOOX United Kingdom - 11374586QN , Casadei Ankle Boot - Women Casadei Ankle Boots online on YOOX United Kingdom - 11529592SJ , Bruno Premi Sandals - Women Bruno Premi Sandals online on YOOX United Kingdom - 11159353FP , nYtE3h2P Massimo Matteo Wing Tip Slip-Onia3JwkBe Rockport Sharp and Ready ChukkaTory Burch Bellini Blush Scallop Wedge Flip Flop Sandals , lady Valentino Open Leather Sneakers Sneakers Diverse new designApostrophe Black Pebbled W/ Ankle Strap SandalsWomen's Valerie Stevens Turquoise Formal Shoes uppers
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.