News of Judy Shelton’s nomination as a Fed Governor is making waves because of her out-of-the-box views, but Jim Bianco of Bianco Research told Real Vision’s Daily Briefing that he doesn’t understand the pushback her nomination is getting.
Bianco said that the Fed could benefit from someone who won’t just toe the line, and that having a heterodox thinker on board could enhance the institution.
He also said that the Fed has played a big role in his thinking about markets. While he was bearish in March and early April, Bianco is now much more bullish, a shift he attributed to the outsized impact the Fed’s stimulus is having on markets. Given all of the stimulus, his forward outlook is that financial markets can still push higher even though the real economy will be in trouble.
Bianco also discussed the significance of flows and retail investors in driving market movements. While the money is at the institutional level and institutional investors still dominate retail investors, the latter has a bigger influence on the flow of money in the markets because of the frequency of their trading.
Though they’re growing exponentially, Bianco pointed out that retail investors are not a monolith. He named three types of retail investors: the traditional investor, who is typically older, fairly experienced, and likely to take a relatively defensive position; Millennials/the Robin Hood types, who are exceptionally bullish and uber aggressive; and fund/ETF investors, who currently seem to be co-investing with the Fed. Since the second quarter, 80% of the money flowing into ETFs has gone into corporate bonds, high yield, and aggregate bond ETFs – the three types of ETFs the Fed is buying.
Bianco ended the interview with a discussion of the recent precious metals rally, and noted that because precious metals are typically considered a hedge against perceived problems in the financial system, their ascent may be signaling that investors are anticipating inflation on the horizon.
Inflation could return and that day may be coming soon, he said. And when that day comes, it will be the end of stimulus pushing markets higher.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Additional disclosure: This is pretty obvious, but we should probably say it anyway so that there is absolutely no confusion… The material in REAL VISION GROUP video programs and publications (collectively referred to as “RV RELEASES”) is provided for informational purposes only and is NOT investment advice. The information in RV RELEASES has been obtained from sources believed to be reliable, but Real Vision and its contributors, distributors and/or publishers, licensors, and their respective employees, contractors, agents, suppliers and vendors(collectively,”Affiliated Parties”) make no representation or warranty as to the accuracy, timeliness or completeness of the content in RV RELEASES. Any data included in RV RELEASES are illustrative only and not for investment purposes. Any opinion or recommendation expressed in RV RELEASES is subject to change without notice. RV Releases do not recommend, explicitly nor implicitly, nor suggest or recommend any investment strategy. Real Vision Group and its Affiliated Parties disclaim all liability for any loss that may arise(whether direct, indirect, consequential, incidental, punitive or otherwise) from any use of the information in RV RELEASES. Real Vision Group and its Affiliated Parties do not have regard to any individual’s, group of individuals’ or entity’s specific investment objectives, financial situation or circumstances. RV Releases do not express any opinion on the future value of any security, currency or other investment instrument. You should seek expert financial and other advice regarding the appropriateness of the material discussed or recommended in RV RELEASES and should note that investment values may fall, you may receive back less than originally invested and past performance is not necessarily reflective of future performance.Well that was pretty intense! We hope you got all of that – now stop reading the small print and go and enjoy Real Vision.