Lower Your Expectations and the Fed Won’t Disappoint: Jim Bianco


Whether it's earnings, the economy, or the Fed, Wall Street, at its core, is ultimately a game of expectations. And right now Jim Bianco, president of Bianco Research, says the anticipation for Wednesday's trifecta of policy proclamations is fittingly low.

"I don't think investors expect the Fed to give them anything concrete on Wednesday," Bianco says in the attached video. He adds that in place of any clarity on QE3, the Fed is more likely to tweak their forecast, refresh their commitment to low rates through 2014, and possibly hint at when accommodation might end.

"They're still under Operation Twist until June 30, so the Fed will be the first one to tell you, 'we don't have to do anything until June 30 or July 1,'" he argues.

From his point of view, the next Fed meeting (on June 19 and 20; there isn't one in May) is going to be a doozy; one in which the Fed offers up a new road-map for the post—Operation Twist era. What that means, he says, is that QE3 is at least a couple months away and might not come to fruition until the fall, if at all.

In the meantime, he's advising investors to hang on to their Treasuries but to lighten up on their stocks in the face of soft earnings and growing problems out of Europe, which will likely continue to weigh on the market. He is also sticking with gold and has a clear preference for emerging markets.

"I am having a hard time making a justification in developed markets—with all of this manipulation from the central banks—that there's anything really cheap," he says, while admitting that he laments the day when "capitalists are running the system and not central bankers."

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