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.L' Autre Chose Court - Women L' Autre Chose Courts online on YOOX United Kingdom - 11237345AMRodo Ankle Boot - Women Rodo Ankle Boots online on YOOX United Kingdom - 11449770NQ , chArMZHL mens/womens Report Shelley Flats Beautiful , Chie By Chie Mihara Dedora - Sandals - Women Chie By Chie Mihara Sandals online on YOOX United Kingdom - 11429726ST , Sofia M. Flip Flops - Women Sofia M. Flip Flops online on YOOX United Kingdom - 11400566QVladies St. John Tan Summer Wedges Elegant and stable packaginglady Betsey Johnson Silver Evie Sandals Fast delivery , LADY Hermès Gold Oran In Sandals finishingwoman Candela Black Sandals Used in durabilitymen's/women's SKECHERS Merklin Rosney Sandals Fine workmanshipDeportivo terciopelo metal trainers , pink, VictoriaALDO UNACLYA - High heeled sandals , Kristin Cavallari Lash Peep Toe Bootie , men's/women's Hush Puppies Waterproof Echo Workday Oxfords Charming designle coq sportif SAINT DINAN - Trainers Colour: bluestone/croissant , men/women ara Milo Sneakers & Athletic ara Amoy , Primabase Sneakers - Women Primabase Sneakers online on YOOX United Kingdom - 11474915ET , Vans Sneakers - Men Vans Sneakers online on YOOX United Kingdom - 11265010SA , mens/womens Clarks Emslie Lulin Heels A balance between toughness and hardness , Ebarrito Sneakers - Women Ebarrito Sneakers online on YOOX United Kingdom - 11396098XJ , Fiorina Sandals - Women Fiorina Sandals online on YOOX United Kingdom - 11473257FJEmanuela Passeri Sandals - Women Emanuela Passeri Sandals online on YOOX United Kingdom - 11564877RSAdidas Originals Sneakers - Women Adidas Originals Sneakers online on YOOX United Kingdom - 11561765DAHenry Smith Boots - Men Henry Smith Boots online on YOOX United Kingdom - 11574273PP , Green George Boots - Men Green George Boots online on YOOX United Kingdom - 11567099AIChristian Louboutin Black Criss-cross Patent Pumps , LADY Marc Jacobs Mj16402 Platforms Has a long reputationwomen Vince Camuto Gold Marston Sandals Very good color , Prada Blue Flower Patent Leather Ankle Strap SandalsWOMEN Dr. Scholl's Nude Wedges Moderate costs
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.