Cashin: ‘The Fed is flying blind’—and so are traders

Cashin: Fed 'flying blind' on economy

The frigid weather and frequent snowstorms this winter have left economic data so tainted that even Federal Reserve officials will have trouble reading the economy, veteran trader Art Cashin told CNBC on Wednesday.

"Not only are we flying blind, but the Fed is flying blind as well," Cashin said on "Squawk on the Street."

(Read more: Winter weather freezing corporate profit growth)

As Wall Street approaches the tail end of earnings season—which Cashin called both "satisfactory" and "unspectacular"—the markets have been preoccupied with the economy rather than corporate revenue growth, he said. Cashin, the director of floor operations at the NYSE for UBS, said the economy shows signs of weakness, and some traders now want to know whether the Fed plans to "taper the tapering."

The most recent weather-affected economic indicator came out Wednesday morning, when housing starts from January posted the biggest decline in new home construction in almost three years.

When the Fed releases its FOMC meeting report from January on Wednesday afternoon, the "properly laundered" minutes should give markets some much-needed guidance, Cashin said.

(Read more: Markets want to know if housing activity is freezing again)

"It might be a bit of a struggle here," Cashin said. "If we get to new highs, that will force some short covering. As far as the economy is concerned, I think we've got some headwinds."

—By CNBC's Jeff Morganteen. Follow him on Twitter at @jmorganteen and get the latest stories from "Squawk on the Street." Reuters contributed to this report.