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.Tom Ford Ankle Boot - Women Tom Ford Ankle Boots online on YOOX United Kingdom - 11463433NQ , L' Autre Chose Sandals - Women L' Autre Chose Sandals online on YOOX United Kingdom - 11384009OPLADY Anne Klein Brown Sandals Really , Ladies Jeffrey Campbell Silver/Pewter Sandals auctionvlcZtMNl men/women Musse&Cloud Malena Heels luxurious , Ladies Easy Street Linin Formal Shoes Order welcome , men's/women's ALDO Yirang Oxfords The latest technology , Adidas Tamaris Slip-ons - black , ASICS GEL 451 - Competition running shoes Colour: neon lime/white , El Naturalista AQUA - Classic ankle boots Colour: blackmen's/women's Clarks Vargo Rise Boots Carefully selected materials , Shuga Sneakers - Men Shuga Sneakers online on YOOX United Kingdom - 11259389OK , Jp/David Boots - Men Jp/David Boots online on YOOX United Kingdom - 11475440MKMen/Women adidas Alphabounce Sushi Suede Sneakers & Athletic adidas Skilled manufacturingLacoste | Lacoste Carnaby Evo 318 leather sneakers with navy trim , men's/women's Even&Odd Trainers Colour: white The highest quality material , mens/womens Nine West Brynlee Heels Contrary to the same paragraph , mens/womens Columbia Bahama Vent Marlin PFG Boat Columbia Order welcome , Giorgio Armani Sneakers - Men Giorgio Armani Sneakers online on YOOX United Kingdom - 11398346CA , Ebarrito Loafers - Women Ebarrito Loafers online on YOOX United Kingdom - 11458702TX , Elata Loafers - Women Elata Loafers online on YOOX United Kingdom - 11501930MV , Stonefly Sneakers - Women Stonefly Sneakers online on YOOX United Kingdom - 11464894RNCalpierre Court - Women Calpierre Courts online on YOOX United Kingdom - 11539854QJAsh Sandals - Women Ash Sandals online on YOOX United Kingdom - 11280884NW , Divine Follie Loafers - Women Divine Follie Loafers online on YOOX United Kingdom - 11562971AP , Chiara Ferragni Sneakers - Women Chiara Ferragni Sneakers online on YOOX United Kingdom - 11339408JVFVvAwo4Q Nunn Bush Lincoln Penny Loafer , buy online LEVIS 2272401920-levis LOW-TOP TRAINERSLADY Alfani Karissa Formal Shoes First quality , Women's Valentino Red Mw2sob95pvn Pumps Beautiful art
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.