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.Paloma Barceló Ankle Boot - Women Paloma Barceló Ankle Boots online on YOOX United Kingdom - 11509365DB , Manufacture Sestè Sandals - Women Manufacture Sestè Sandals online on YOOX United Kingdom - 11462111MS , Raparo Ankle Boot - Women Raparo Ankle Boots online on YOOX United Kingdom - 11460006HA , man/woman Native Shoes Jefferson Sneakers & Athletic Native Shoes Speed refundFerrari Basket Sneakers | MoonlessNight-MoonlessNight , J|D Julie Dee Ankle Boot - Women J|D Julie Dee Ankle Boots online on YOOX United Kingdom - 11292749OAWOMEN Saint Laurent Gold Jane Sandals Known for its good quality , Prada Black New Men's Leather Neoprene Sneakers 9uk/11us Sneakerswomens Cole Haan Brown/Tan Wedges High quality productsWOMEN Gold Flip Flop Sandals clearance saleThe North Face DELLAN - Trainers Colour: blackmen's/women's David Tate Norma Sandals Comfortable touch , Hunter Original Sneaker Hi Canvas Desert Camoman/woman Jewel Badgley Mischka Ambrosia Heels buy onlineAdidas Marc O'Polo High-top trainers - taupe , Adidas Reebok Classic PHASE 1 PRO - Trainers - spirit white/whiteCMP ALTAK TRAIL SHOES - Walking shoes - nero/yellow fluo , Le Crown Loafers - Men Le Crown Loafers online on YOOX United Kingdom - 11070029XWMunich Sneakers - Women Munich Sneakers online on YOOX United Kingdom - 11453614PEFranco Colli Court - Women Franco Colli Courts online on YOOX United Kingdom - 11471446LAReputation first Rockport Works Top ShoreWin highly appreciated Fred Perry Underspin Leather , buy Donald J Pliner Dacio2New varieties are launched Eric Michael QuebecComfortable touch Franco Sarto L-Belaire , MISS Saint Laurent Black Tribtoe Platforms Has a long reputation , Prada Black Men's Nylon Velvet Low Top Sneakers Sneakers , Women's Børn Gold Cream Leather Sandals Louis, in detail , Maison Margiela Black Men's Textured Leather High-top Sneakers , WOMENS Furla Magnolia Carmen Sandals Crazy Price, Birmingham
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.