Ken Fisher on U.S. Markets After Jerome Powell Signaled That a Rate Cut is Coming

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Powell 발언 후 금리인하 신호에도 미국 강세장은 지속된다는 견해. 2024년 6.1% 부근 S&P500이 역사적 고점 근접, 선진국 시장 동조화 강조. 대선 해(선거년 하반기 긍정 비율 83%) 및 선거 후 불확실성 해소를 강세 근거로 제시. 강세장 초기(2022.10 시작)라 아직 끝나지 않았다고 주장. 시장 두려움은 강세 신호로 해석. 공화당 집권 시 취임년 부진, 민주당 집권 시 취임년 호조라는 'perverse inverse' 패턴 설명. 기술주 주도는 맞지만 전 세계 주식의 2/3가 올랐다고 반박.

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01. Powell's speech today had a very different tone than it did two years ago , when inflation was rising. Reducing inflation will likely require a sustained period of below-trend growth. Furthermore, there is a strong likelihood of some weakening in labor market conditions. Although higher interest rates, slower growth, and weaker working conditions will reduce inflation, they will also cause pain for households and businesses.

02. These are the unfortunate costs of reducing inflation . But failing to restore price stability would mean much greater pain. Just the words give you chills, don't they? His warning that day spooked the markets. The Dow fell by just over a thousand points. Think about it carefully. However, today's change could be signaling, as I was discussing with Katherine, a new era.

03. It will mean lower interest rates on everything from cars and homes to credit cards. Those with money in savings accounts, however, may need to change their strategy. Ken Fisher is the founder and executive chairman of Fisher Investments and he's with us now. You know, this is the part of the money that everyone is interested in.

04. Heed their warning: ignore the Fed, or more specifically, don't bet on the Fed. Okay, let's put that advice aside. What are you betting on now, given our situation in the markets and, more importantly, where do you think the market might be headed? First, it's a bull market. It has been a bull market.

05. We are just six-tenths of a percent away from 1% of the all-time highs in the S&P 500. The global market, on a capitalization-weighted basis, is right behind. The fact is, as I have said for a long time, the markets of the developed world are highly correlated. The presidential election year in the United States has been positive in 83% of history since accurate data has been available in 1925, when the first half of the year has been positive, as it was this year.

06. There has only been one exception in history where the second half wasn't positive, and that was a long time ago, in 1948. The fact is that the economy is doing well, the market is doing well. The election reduces uncertainty from here on out, as we finally have a winner and clarity on what politics looks like going into the next cycle.

07. And all of that is bullish. The process of trying to guess what the Fed will do, or thinking about what Powell will say next, or moving back and forth, is a bit like someone trying to guess who wins or loses in a game of musical chairs when the music never really stops; Because after the next thing comes the next thing, and the next thing, and the next thing.

08. We heard you and I want to return to your analysis of the presidential elections, but I also want to ask your opinion on the bull market that sometimes makes people nervous, right? They think we 're close to a ceiling. That we're going to reach a limit. Shouldn't I withdraw some money from the market right now?

09. Perhaps do some rotation. Well, first of all, most people just got the fright of their lives. Well, while the market was plummeting between mid-July and early August, and whenever that happens, emotions run high. People tend to believe more in reported fears. And all of that restarts the downward psychological state.

10. Markets reach new, seemingly endless highs in a bull market. This bull market that began in October 2022 , oh, by the way, while the Fed was still in the process of raising rates by 75 basis points at a time month after month and then continuing after, this bull market is not two years old . There is almost never a bull market that reaches its first anniversary without reaching its second.

11. But this simply isn't a bad time. And the fact that people fear it's too good is a bullish sign, not a bearish one. That's fear. Fear is a good thing. Understood. And I want to return to that election cycle. So it's something you call the perverse inverse. Can you explain that, please? Clear. We have a very long history of presidential elections and stock market returns.

12. So, it's easy to analyze what happens in the first half of the year, the second half of the year, if the Democrats win, if the Republicans win. When we elect a Republican, because people tend to think that Republicans are more pro-business and anti-regulation and all that, the markets tend to be above average in the election year, particularly in the second half of the election year.

13. When we elect a Democrat, the opposite happens. But then, when we get to the inaugural year, those two reverse, and in the inaugural year, having elected a Democrat, we get returns significantly above average. And with the Republicans, below average. Because? Because people tend to think that Democrats are anti-business, Republicans are pro-business, Republicans are pro-free market, and Democrats are more pro-regulation.

14. And the fact is that the American system is set up to prevent presidents from doing as much as some hope and others fear. And in the inaugural year, after people have been excited or depressed about who was elected and how it would impact business, the surprise is that the president can't do as much as people might have hoped or feared.

15. And therefore, the Republican year tends to be disappointing in the inaugural year. Democrats in their inaugural year tend to be a positive surprise because they cannot do what so many feared they would do to harm businesses and free markets. You know, regarding the analysis itself, some people have feared that the bull market is too dominated by technology, too much by just a few industries or even a few companies.

16. Do you see it as a problem? I know that recently there has been more diversity, so to speak, in some of the market gains in terms of sectors. I see that, from the moment it was first uttered, as ignorance. The fact is that this bull market has not been as broad as many believe, but in reality it has been broad.

17. The easiest way to see that is to look at all the countries, most of them in the developed world, not all but most, that really don't have technology and have reached all-time highs in this bull market. That couldn't happen if it were a narrow market led by only a few technology stocks. Now, it is true, of course, that technology has performed better than other sectors.

18. And you can see it daily, almost every day. Not every day, but almost every day. When the market goes up, technology goes up even more. When the market declines, technology declines even more. That's because technology is leading the way. And if you believe it's a bull market, like I do, you believe technology will continue to lead.

19. But two-thirds of the stocks this year have risen considerably overall worldwide. That is a fact that most people simply do not seem prepared to accept. And I understand your point about the ignorance part. Guilty as I am accused. We will ride the bull and hope our stomachs can hold out. Ken Fischer for us. Have a great weekend. I really appreciate it. Thanks for inviting me, Paul.