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.Cesare Paciotti Ankle Boot - Women Cesare Paciotti Ankle Boots online on YOOX United Kingdom - 11505143GP , Passion Blanche Ankle Boot - Women Passion Blanche Ankle Boots online on YOOX United Kingdom - 11576604DRLadies Arche Tan Sandals Charming design , Ovye' By Cristina Lucchi Loafers - Women Ovye' By Cristina Lucchi Loafers online on YOOX United Kingdom - 11508609GV , Adidas Originals I-5923 W - Sneakers - Women Adidas Originals Sneakers online on YOOX United Kingdom - 11540539HO , Fila Heritage Original Fitness - Sneakers - Men Fila Heritage Sneakers online on YOOX United Kingdom - 11379414CG , womens FreeBird Ice Distressed Claw Sandals Charming design , YOKONO Serbia 010 ZAPATO CONFORT DE MUJERIvy Kirzhner Cognac Olympian Studded Heels Sandals , men's/women's Gabor Gabor 6.5852 Heels Great varietyPieces PSMOA FLOWER - Trainers Colour: black , Men/Women Roxy Blake Mid Boots uniqueSpringa Sneakers - Men Springa Sneakers online on YOOX United Kingdom - 11457214UVGinevra Boots - Men Ginevra Boots online on YOOX United Kingdom - 11403132PV , Vibram Boots - Men Vibram Boots online on YOOX United Kingdom - 11473030JVGiovanni Conti Boots - Men Giovanni Conti Boots online on YOOX United Kingdom - 11471622VGMen/Women bernie mev. Paris Heels Highly appreciated and widely trusted in and outD-S!De Sneakers - Women D-S!De Sneakers online on YOOX United Kingdom - 11236370KVVicini Court - Women Vicini Courts online on YOOX United Kingdom - 11311818DM , Olivia's Bow Sneakers - Women Olivia's Bow Sneakers online on YOOX United Kingdom - 11549889HUL'f Shoes Sneakers - Women L'f Shoes Sneakers online on YOOX United Kingdom - 11545692HU , Philippe Model Sneakers - Women Philippe Model Sneakers online on YOOX United Kingdom - 11247113VC , Hogan Ballet Flats - Women Hogan Ballet Flats online on YOOX United Kingdom - 11300122LA , Vagabond Shoemakers Court - Women Vagabond Shoemakers Courts online on YOOX United Kingdom - 11479423LXHarley-Davidson Allerton The Harley-Davidson Allerton bootie has a moto-inspired style that will have you looking ready for the road even when you're just running to work.