Need to Know: Investors are asking too much from the stock market, says this strategist.

Our call of the day comes from Jim Bianco, president of Bianco Research, who says the stock market is finding a lot of competition these days as investors seek out better alternatives, and that could be holding the market back.

The comments came via an interview with Bianco by Hedgeye Risk Management’s CEO Keith McCullough at the Hedgeye Investing Summit on Tuesday.

First, Bianco points to a study from the University of Chicago’s Center for Research in Security Prices that showed how over many, many years, the stock market will return 9% for investors.

“Okay, I can get 5.5% [return] without taking any without taking any risks by putting it in a money market or buying a six-month T-bill. That’s over half of the gain…or maybe approaching two-thirds of the game that I would get over a long term in the stock market without any risks. Is that incremental extra 1/3 worth all the risk that I need to take? A lot of people say ‘no,’ and that’s why you see massive inflows into money-market funds,” says Bianco.

He says things are different now and it’s not like 2019, when the big argument was TINA — or there is no alternative to the stock market.

The strategists pointed to other cards stacked against stocks, such as the lopsidedness caused by the seven Magnificent Seven tech darlings — Apple
AAPL,
+0.79%,
Microsoft
MSFT,
+1.23%,
Alphabet
GOOGL,
+1.80%,
Amazon
AMZN,
+1.81%,
Nvidia
NVDA,
+2.20%,
Tesla
TSLA,
-0.24%
and Meta Platforms
META,
+1.86%.
.

“Why is everything but seven stocks struggling? Because everybody’s sitting there looking at a 5.5% [return] with no risk and they are saying, ‘You know, call me when there is going to be a better opportunity in the market because right now I’m just happy taking my 5.5% an sleeping well,’” says Bianco.

Bianco says in recent years some of the investing population have avoided cryptos and other “sugar highs” — he has referred to the stock market as being diabetic thanks to years of Fed stimulus and zero interest rates. Many of those are retirees who waited 15 years to get a decent return out of income investments.

“So that crowd is coming back, and I think it’s bringing more of a balance in the market,” he says.

And that brings him to his next point that investors are just too demanding these days, wanting the stock market to make them wealthy, offer morality through ESGs, fund their retirement and even entertain them. That’s also a dangerous path for the market, he said.

“For a moment there, from 2015 to 2019, it looked like it might be able to be all of those things at the same time, but that’s because we were in a sugar rush,” of Fed stimulus he said.

So investors are facing a time soon when they need to decide what they want from stocks. “And we’re going to have to make some hard choices and I think that’s part of this transition.”

Even the Fed, Bianco says, wants the stock market to work for it as a policy tool — dropping when it wants the economy to slow down, and rising when it wants the economy to speed back up. “So we’ve got all these competing forces that are trying to make the stock market do too many things all at once,” he said.

One fading breed out there? Those hoping for a stock crash so that they can go on a buying spree until the Fed starts printing money and pushing the market higher, says Bianco.

Read: Time for big shift from stocks to credit as ‘easy money’ ends, says billionaire investor Howard Marks

The markets

Stock futures
ES00,
+0.38%

NQ00,
+0.36%
are rising ahead of inflation data, while Treasury yields
BX:TMUBMUSD10Y

BX:TMUBMUSD02Y
are steady. The dollar
DXY
is down, gold
GC00,
+0.43%
is up and oil
CL.1,
+0.99%
is also higher.

For more market updates plus actionable trade ideas for stocks, options and crypto, subscribe to MarketDiem by Investor’s Business Daily.

The buzz

September CPI will be released at 8:30 a.m. and economists expect some slowing — up 0.3% for the month and 3.6% year over year. Core CPI — minus food and energy — is due to rise 0.3% on the month and 4.1% over the year. Weekly jobless claims will be released at the same time.

A handful of earnings are rolling out ahead of the open: Domino’s Pizza
DPZ,
-0.44%,
Delta Air Lines
DAL,
+0.70%,
Fastenal
FAST,
+0.29%
and Walgreens Boots Alliance
WBA,
+0.98%.
Domino’s reported revenue shy of estimates, while Delta beat earnings expectations and Walgreens is down on disappointing results.

More labor unrest hits Ford shares
F,
+0.41%
as 8,700 workers at a Louisville truck plant — its biggest — go on strike.

Microsoft
MSFT,
+1.23%
owes an extra $29 billion in back taxes, says the IRS.

The International Energy Agency is warning of a higher risk to oil markets from the Israel conflict, in its sixth day.

Superstar Taylor Swift opened her Eras Tour documentary flick a day early — Thursday — in North America due to demand. Shares of distributor AMC
AMC,
+5.04%
edged higher with the film breaking records for single-day advance sales. That’s as some economists note increasingly weak movie attendance by consumers.

Best of the web

China on the hunt for wheat after heavy rains damage its harvest.

China’s stake in the Middle East is its thirst for oil.

Stock-market bear Jeremy Grantham is probably right about this, history says

The chart

It didn’t take long for the market to price out all the fear that has gone into oil prices after the surprising Hamas attack on Israel, as our chart of the day shows. Read more here.

The tickers

These were the top-searched tickers on MarketWatch as of 6 a.m.:

Random reads

Spotted in Colorado: Bigfoot

Dead at 92, entrepreneur Chuck Feeney, who gave away $8 billion in his lifetime.

A California Powerball player hits the $1.7 billion jackpot.

Need to Know starts early and is updated until the opening bell, but sign up here to get it delivered once to your email box. The emailed version will be sent out at about 7:30 a.m. Eastern.

Listen to the Best New Ideas in Money podcast with MarketWatch financial columnist James Rogers and economist Stephanie Kelton.