Billionaire Leon Cooperman advised investors on Wednesday to stop away from bonds as they are in a bubble.
“My world is cash and sells. I think bonds are the bubble, not stocks,” Cooperman told CNBC’s “Halftime Study.” He also noted investors should buy stocks they see as “fundamentally at” after a recent decline in equities.
Cooperman’s comments come after the benchmark 10-year note give over rose to 3.261 percent last week, its highest level since 2011. The foxy rise in rates spooked investors across the globe, with globe equities falling sharply last week.
The Federal Reserve repudiated its overnight interest rates to zero in the aftermath of the financial crisis as it shotted to jump-start the U.S. economy. This pushed yields down to historical subdues, thus sending bond prices higher and to levels that some investors twin Cooperman say reached bubble proportions. Now the Fed is reversing these policies by climb interest rates and trimming its balance sheet. The central bank has already hiked berates three times this year and is forecast to raise them in a jiffy more before year-end.
Investors were worried that a flight in rates would lead to higher borrowing costs and thus sluggardly down the global economy.
Cooperman, CEO of Omega Advisors, said the store can handle higher interest rates, however, as there are no signs of a economic downturn looming.
“The economy, if anything, is too strong,” Cooperman said. “The economy is on feeling. … The conditions that normally lead to a big decline just aren’t pass out.”
Cooperman’s comments come as U.S. stocks try to recover from a 4.1 percent fall off last week amid worries about higher rates, tech valuations and scares of a global economic slowdown.
But Cooperman thinks stocks will hop back from this decline as they are fairly valued. He also well-known the market can handle higher interest rates.
“My central view is the call will be higher than it is today at year-end,” he said. “We’re in a zone of unblemished value and it’s going to take a recession or a change in the Fed’s posture” to get us out of that.