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.Patrizia Pepe Ankle Boot - Women Patrizia Pepe Ankle Boots online on YOOX United Kingdom - 11512033LI , Vagabond Shoemakers Ankle Boot - Women Vagabond Shoemakers Ankle Boots online on YOOX United Kingdom - 11519614RK , Marco Barbabella Court - Women Marco Barbabella Courts online on YOOX United Kingdom - 11519363CJ , ZgPIZ2Gu men's/women's Bandolino Faleria Flats durability , Twin-Set Simona Barbieri Ankle Boot - Women Twin-Set Simona Barbieri Ankle Boots online on YOOX United Kingdom - 11484939OU , Claudia By Isaberi Ankle Boot - Women Claudia By Isaberi Ankle Boots online on YOOX United Kingdom - 11568808KE , SKECHERS Performance GO GOLF - Elite V.2 Acewomen Dior Black 1 Formal Shoes For sale , Men/Women Steve Madden Haleb Boots cheap priceHUF GALAXY - Trainers - white/antique , men/women Naturalizer Elly Loafers online salemen's/women's Anne Klein Cici Heels Bargainmen's/women's Schutz Barala Heels Special price , Even&Odd High heeled sandals Colour: blackAdidas Reebok Classic DOUBLE - Trainers - chalk/bare beige , Vans HALF CAB - Skate shoes - darkest spruce/blackman/woman Kenneth Cole Reaction Cake Jar Heels Price reductionDorothy Perkins SHOWCASE SAGE - High heeled sandals , men's/women's Kelsi Dagger Brooklyn Ashton Boots International choice , men's/women's Comfortiva Vail Heels Highly praised and appreciated by the consumer audiencecamel active SCANDINAVIA GTX - Winter boots Colour: dark brown , Sebastian Espadrilles - Women Sebastian Espadrilles online on YOOX United Kingdom - 11331574MONine West Court - Women Nine West Courts online on YOOX United Kingdom - 11236618MD , Bruschi Ballet Flats - Women Bruschi Ballet Flats online on YOOX United Kingdom - 11166647AQ , Marni Ankle Boot - Women Marni Ankle Boots online on YOOX United Kingdom - 11503266SWb3yrzq6F Sanita Smart Step Professional SirenReliable quality inov-8 X-Talon 230Brighton Trento Part of the Brighton Ferrara Collection. , Sbicca Percussion The SbiccaPercussion will add some edge to your feminine look.