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.Camper Runner Four - Sneakers - Men Camper Sneakers online on YOOX United Kingdom - 11434379AFDADá S031010587bpi SANDALIA PLANA DE MUJERGiuseppe Zanotti Metallic Silver & Orange New Gz Men Eu 46 Patent Leather Crystal Detail High-top Sneakers , zVJJjNbj man/woman Asolo Cylios Boots ClearanceClaudia By Isaberi Ankle Boot - Women Claudia By Isaberi Ankle Boots online on YOOX United Kingdom - 11568985RPHOGL 103708 WEDGE ANKLE BOOTS FOR WOMENOnitsuka Tiger CORSAIR - Trainers Colour: white/hunter green , men/women Keen Dauntless Posted Sandals Clearance sale , Star player ox trainers , off-white, ConverseShoe The Bear COLE - Trainersmen's/women's ALDO Legosien Oxfords high qualityAdidas Desigual WOMAN PRINT - Sports shoes - peacoat , Simply Be WIDE FIT FLEUR - Boots Colour: black , Men/Women El Naturalista Marine N5343 Flats Clearance pricemen/women Kristin Cavallari Tasteful Leather Sandal Sandals comfortability , Tod's Loafers - Men Tod's Loafers online on YOOX United Kingdom - 11568526RN , man/woman Altra Footwear Golden Spike Sneakers & Athletic Altra Footwear Moderate pricePlein Sport Sneakers - Men Plein Sport Sneakers online on YOOX United Kingdom - 11507530RH , Gianfranco Lattanzi Sneakers - Men Gianfranco Lattanzi Sneakers online on YOOX United Kingdom - 11305790HEHogan Sneakers - Women Hogan Sneakers online on YOOX United Kingdom - 11396789PN , Fiorentini+Baker Ankle Boot - Women Fiorentini+Baker Ankle Boots online on YOOX United Kingdom - 11532420GRCafènoir Ankle Boot - Women Cafènoir Ankle Boots online on YOOX United Kingdom - 11515576IBAsh Ankle Boot - Women Ash Ankle Boots online on YOOX United Kingdom - 11570810XGHogan Ankle Boot - Women Hogan Ankle Boots online on YOOX United Kingdom - 11300106NJLotto Leggenda Sneakers - Men Lotto Leggenda Sneakers online on YOOX United Kingdom - 11329391XKHighly praised and appreciated by the consumer audience ASICS GEL-Nimbus® 20 Lite-Show , General product ECCO Scinapse High TopMezlan Velez Take your gentleman look into a new level with the Mezlan Velez!Valentino White with Gold Stripe Stud Leather Open Sneakers SneakersWomen's Off-White™ Aa7293-100 02/15/17 Sneakers Order welcome ,
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.