|5 money moves a Fed follower is making now Investors living in Bernanke’s world, James Bianco says |
By Jonathan Burton, MarketWatch
SAN FRANCISCO (MarketWatch) — There’s a heaviness in James Bianco’s voice when he talks about the U.S. economy and the investing climate. It’s the tone of someone who is dismayed by current conditions but is resigned to them.
Bianco, president of Bianco Research LLC, provides top-down economic and market research that influences the buy and sell decisions of many large institutional investors. What is his view of the U.S. economy today? Corporate executives are passengers, and government policy makers, starting with Federal Reserve Chairman Ben Bernanke, are driving the ship.
Or to put it bluntly: It’s Ben’s world, and we’re just investing in it.
“Stock picking is a dead art,” Bianco said in a recent telephone interview. “The most important man in investing decisions is Ben Bernanke. It shouldn’t be, but it is. We are in a post-crisis environment where the Fed is running the most extreme policy it’s ever run; Europe is even more extreme. That affects all investment decisions.”
Moreover, Bianco added, investors can either follow the Fed using short-term tactics that anticipate policy makers’ moves, or fight the Fed with a longer-term, defensive stance. Neither choice is particularly attractive, he said.
So Bianco is straddling both sides. Investors can expect “some version” of additional quantitative easing from the Fed, or “QE3,” before June, he predicted. That will lift stock prices, but absent economic improvement, these gains will be fleeting.