There is probably no exit plan from the bearish bond market, not even for stock investors.
According to market research expert Jim Bianco, severe Federal Reserve policies to curb the wild inflation will result in huge losses to Wall Street.
“Eventually, this is going to come back and hurt all financial assets,” the Bianco Research president told CNBC “Fast Money” on Thursday.
Bianco’s sentiment on stocks became bearish late last year, following inflation risks. The market researcher puts blame on the Fed for delaying the pandemic’s easy money policies, and hiking interest rates.
“The call last year that inflation would be well-contained and transitory is arguably one of the worst forecasts in Federal Reserve history,” said Bianco. “They are now stuck with this ultra-aggressive policy because they didn’t start raising rates at a very leisurely pace a year ago.”
He worries about the big catch-up costs.
“They don’t intend on creating a hard landing. But what they do intend on doing is reining in prices,” Bianco said. “They want lower inflation, and they’re going to raise rates till they get lower inflation. How are they going to do that? They’re going to slow demand down.”
