Leon Cooperman Says Fed Fuels a Debt Binge the Economy Can’t Handle

(Bloomberg) -- The Federal Reserve has created a speculative bubble that has pushed debt levels beyond what the U.S. economy can support, Leon Cooperman said.

“They have created a real speculative environment,” Cooperman said Monday on Bloomberg Television. “I am uncomfortable at the present time, not because of the virus, because I’m focused on something the market isn’t focused on. And that is the amount of debt that’s being created. Who pays for the party when the party is over?”

It took the U.S. “244 years to go from zero national debt to $21 trillion,” he said. “We will probably end this year with $27 trillion. That’s a growth rate in debt far in excess of what the economy is growing at and I think that’s going to be a problem down the road.”

Cooperman retired from managing client money in 2018 and converted his Omega Advisors hedge fund into a family office.

Among his other comments:

• Bonds present “return-free risk and that’s what has worked in favor of the stock market.”
• Low interest rates “are indicative of a problem economy. We have had artificial support for the economy since 2008. I don’t look at that as being a positive.”

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