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.Bp Zone Ankle Boot - Women Bp Zone Ankle Boots online on YOOX United Kingdom - 11459973GSColors Of California Loafers - Women Colors Of California Loafers online on YOOX United Kingdom - 11456796RE , See By Chloé Sandals - Women See By Chloé Sandals online on YOOX United Kingdom - 11380491UJ , Lorenzo Mari Sandals - Women Lorenzo Mari Sandals online on YOOX United Kingdom - 11484115JFCarhartt 4 Inch Black Waterproof Slip-On , Dr. Martens 1460 Vegan 8-Eye BootvYwDk72N men/women Aerosoles Buttercup Sandals TRUEWomen's Stuart Weitzman Snakeskin Wedges Economical and practicalwomen Valentino Poudre Rockstud Sandals Win highly appreciatedTory Burch Black Laney Embellished Runner SneakersLadies Vaneli Tan Elfry Leather Wedges Modern , WOMEN Christian Louboutin Black 1140109 Platforms economicalmens/womens OYSHO Trainers Colour: white TRUEmens/womens Frye Melissa Logo Boots online saleman/woman ALDO Gweria Boots Outstanding featuresDiesel Classic ankle boots Colour: black , Pepe Jeans WADE - High-top trainers Colour: black , men's/women's Clergerie Beluga Clogs & Mules Pleasant appearanceAdidas Tamaris Classic ankle boots - black , Casadei Court - Women Casadei Courts online on YOOX United Kingdom - 11544181VHSantoni Boots - Men Santoni Boots online on YOOX United Kingdom - 11476406MTTod's Loafers - Men Tod's Loafers online on YOOX United Kingdom - 11186742QX , mens/womens Nine West Brynlee Heels Contrary to the same paragraph , Soludos Sandals - Women Soludos Sandals online on YOOX United Kingdom - 11476213KR , Spaziomoda Court - Women Spaziomoda Courts online on YOOX United Kingdom - 11569026MFHumanoid Ankle Boot - Women Humanoid Ankle Boots online on YOOX United Kingdom - 11557101HI , Various styles Oboz Sawtooth Low BDryFrye Brown Agnes Woven & Studded Saddle Peep-toe Leather Strap Sandalslady Christian Louboutin Tan Espadrille Wedges Moderate costs , womens Salvatore Ferragamo Blac Liena Pumps quality Queen
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.