Traditional savings accounts are growing relative to stocks.
And, the winner could be your neighborhood bank for the first time in years, according to Wall Street forecaster Jim Bianco.
He argues that rising interest rates provide investors with safer ways to generate income.
“Money isn’t trash anymore. It was a two-decade-old meme that doesn’t apply,” the president of Bianco Research told CNBC.quick moneyWednesday. “Silver could actually be kind of an alternative where it was just a waste of time all through the 2010s. It’s not that anymore.”
He uses the 6-month treasury bill, which is currently yielding over 5%, as an example. Bianco thinks it will soon reach 6%.
“Sucking Money from the Stock Exchange”
“You’re going to get two-thirds of the long-term stock market appreciation without any risk,” Bianco added. “It will create strong competition for the stock market. It could suck money from the stock market.”
His latest comments follow the release of the Fed’s minutes from the last meeting. Fed says rate hikes ‘in progress’ are needed to curb inflation.
THE Dow And S&P500 closed lower after minutes while heavy tech Nasdaq made a small gain. The S&P 500 is now on a four-day losing streakand the Dow is negative for the year.
“Investors are going to have to start thinking about the idea that we have a 5% or 6% world,” Bianco noted.
He believes that inflation is unlikely to move significantly in the coming months.
“A lot of people are starting to think … the Fed just isn’t going to do one more rate hike, but it’s going to do a lot of more rate hikes,” Bianco said. “That’s why I think you’re starting to see the stock market waking up to this.”