Market Forecaster Jim Bianco Calls FOMC Minutes 'Hyped:' For Stock Market 'Cash Is No Longer Trash'

Market forecaster Jim Bianco, President and Macro Strategist at Bianco Research, reportedly said Wednesday’s Federal Open Market Committee (FOMC) minutes were hyped and asserted that cash is no longer trash given the current interest rate regime where it could suck away money from the stock market.

“I think investors are going to have to start thinking about the idea that we have a 5% or 6% world and they're going to have to start thinking about the idea that for the stock market, cash is no longer trash. That was a two-decade-old meme that doesn't apply,” he told CNBC.

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Bianco further explained how an investor would get a 6% return from a six-month Treasury bill in current times. “You're going to get two-thirds of the long-term appreciation of the stock market with no risk at all. That is going to provide heady competition for the stock market that could suck money away. Cash could actually be somewhat of an alternative where it was just a waste of time throughout the 2010s. It's no longer that anymore,” he said.

FOMC Minutes: “Jerome Powell said on February 1st that he would lay out a detailed plan for how the Fed would pause. When we got there, we didn't really get a detailed plan or whatever plan we got was before a monster payroll report and before an uptick in CPI and it really doesn't apply anymore,” he noted.

Major indices closed mixed following the release of the minutes. The SPDR S&P 500 ETF Trust SPY closed 0.14% lower while the Vanguard Total Bond Market Index Fund ETF BND closed 0.22% higher.

Bianco pointed out that the street is believing the Fed is going to raise rates not only in March and in May but again in June and go to five-and-a-half percent – a fact that is moving towards reality.

“The minutes didn't do anything to stop that train that we are going beyond the five-and-a-quarter that the Fed was saying would be their terminal or endpoint just a few weeks ago,” he said.

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