Wall Street is on a one way trip to misery until Fed hikes stop, market forecaster Jim Bianco warns

Jim Bianco warns that Wall Street is on a one way trip to misery until inflation peaks and the Fed stops hiking rates.

According to the president of Bianco Research, the Fed only has one tool to bring in inflation and that is to slow demand. We don't like what's happening, but I don't think they're too upset with what's happened in the stock market for the last few weeks

The S&P 500 fell for the fifth day in a row on Tuesday. The index hit an all-time high in January. The indexes are off from their records.

There are 390,000 jobs in May and we are in a bad news situation. The stock market can be made miserable by the Fed.

The 10-year Treasury Note yield hit its highest level in more than two years. Over the past week, it has increased by 18%.

He referred to the bond market as a complete mess. Year-to-date, the bond market losses are the greatest ever. This is shaping up to be a bad year for bonds. The market for mortgage-backed securities is not good. It is awful.

Inflation is expected to come back for two years. He warned on CNBC that inflation would surge to highs not seen in a generation.

Quantitative tightening is on the way. The largest bond buyer is leaving. "That's the Federal Reserve," said Bianco. They are intending to raise rates very quickly.

The Fed is expected to raise rates by 75 basis points on Wednesday. He predicts a 75 basis point hike at the next meeting.

If you raise rates enough, you can butcher the economy and cause demand to fall off a cliff. Bianco said that it wasn't the way he wanted it to be done. It is possible that they will end up going too far and making a bigger mess of this.

He thinks the Fed needs to see serious damage to the economy in order to back off. He warns that almost every financial asset is vulnerable to sharp losses due to inflation. The odds are against a soft landing.

Commodities are in a good position to beat inflation. There are serious risks there as well.

You are not currently in demand destruction. He said that until you do, commodities will keep going higher. There is a caveat I would give people about commodities.

Bianco thinks government-insured money market accounts should be more attractive for people with a low tolerance for risk. He thinks they will jump 1.5% in two weeks. According to Bankrate.com, the national average rate on money market accounts is 0.05%.

It couldn't keep up with inflation. There are few alternatives for investors.

Bianco said that everything is in the wrong direction.