His base case calls for no interest rate hikes this year, but market researcher James Bianco has his guard up.
He's worried the Federal Reserve may become too ambitious and wreck the economy.
"The economy is OK on its own. I don't really think it needs tightening," the Bianco Research president said Wednesday on CNBC's "Trading Nation." "But I do fear though if we were to tighten again, that we risk — in using [former Fed Chairman Ben] Bernanke's terms — 'murdering the economy.'"
Bianco's chief concern is the Fed will use the 2019 market rebound as motive to revive rate hikes.
"The stock market is rallying basically for one reason: The Fed backed off," Bianco said.
The Fed's tightening policy was the main driver behind the historic Christmas Eve market plunge. The S&P 500 closed the day 19.8 percent below its Sept. 20, 2018, all-time closing high — just 0.2 percent away from the long-held definition of a bear market.
Since the December sell-off, the S&P has rebounded by 17 percent.
"The problem is that if you look at the consensus opinion of economists, and remember the Fed is a building full of economists, they think they should be raising two maybe three times," he added. "This is what got us into trouble in December, and they're calling for more of the same."
Regardless of whether the Fed hikes or not, Bianco suggests there may not be much market upside left.
"We've done all we can do with backing off the Fed," he said. "We need earnings to step up. We need the economy to step up. Maybe a trade deal might help at the margins."
And, he warns the notion of an earnings slump materializing this year shouldn't be ignored.
"The big buzz word this week is 'earnings recession,' and that's legitimate," Bianco said. "There is no earnings growth."
