Ken Fisher on Inflation Data, Currency Reset Risks, Commodity Opportunities and More– April 2026

Transcript:

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Naj Srinivas

Hello and welcome to the Fisher Investments Market Insights podcast, where we discuss our firm's latest thinking on global capital markets and current events.

I’m Naj Srinivas, Executive Vice President of Corporate Communications here at the firm. Today, we’ll hear from founder, Executive Chairman and Co-Chief Investment Officer of Fisher Investments, Ken Fisher.

In this episode of Market Insights, Ken answers some common listener questions to help you better understand the world of finance and investing.

But before we dive in, I'd like to ask you a favor. Recommend our podcast and rate it wherever you listen. In just a few minutes, you can help make this valuable information available to even more people. Thanks so much for your help, in advance.

With that, let's dig in with this month’s Ken Fisher mailbag. Enjoy.

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Ken Fisher

So, every month I get questions that get sent in, and because I've got a septuagenarian aged eyesight, I print them out on cards with big writing on them and read them to you and try to give you fast answers, which is effectively impossible for me to do.

The first one this month is, how accurate is our inflation data given the goods and services that are chosen to calculate? Now, the reality is, the inflation data is never very accurate. For two reasons: one, when you think about it as it relates to you personally, you probably aren't buying the same basket of goods that's chosen to reflect a given inflation index. Secondly, there's different inflation indexes that reflect different collections of things. And thirdly, this is one of the many, many, many constructed index features, inflation being one, but GDP is another one, for example. It's broadly used, broadly accepted, but where people tend to interpret the precision of the numbers as a reflection of accuracy, when in fact there can be no such precision. The notion of the difference between, in reality, as opposed to cultural yakking between let's say 2.5% inflation and 2.7% inflation is treated in markets all the darn time like it's of significance. But in fact, these numbers are not accurate enough for those variations to mean anything as the way the real world works when you step away from the excitement about data being interpreted by the world. So, in saying that, let me just say to the basic question is, how accurate are our inflation data given the goods and services that are chosen to calculate? Not very.

Is there a currency reset going on? Could it mean there is a flight from the dollar? Well, currencies trade all the darn time. As I've said many, many times and almost exactly so. In the first year or two of republican presidencies, there is a very heavy tendency, in history, for the dollar to fall. Since World War II, the only exception to that has been in the first term of Ronald Reagan. That's the only significant exception. The fact is, this time the dollar has fallen almost exactly, I mean if you just overlay them, and I've done this in a number of places and publish the data in my New York Post column and otherwise. They just look like charts that are just wiggled on top of each other. The time, this time, and the time of President Trump's first term, right up through this week as I speak. They just overlap perfectly. This time the decline is just a hair whiskers smaller than the decline in President Trump's first term this far into his first term. Is there a reset going on? No. A reset going on would mean that something's changing the way money works. And so, some people would have said, oh that could be what was going on with bitcoin, as bitcoin was soaring. And maybe other crypto too. But the fact is, bitcoin has fallen apart this year. That tells you no, there's no reset there. Money is what money is, what it's been used for the same purposes. Currencies fluctuate, they've always fluctuated. In the very long term, they tend to equalize. In the short term, they tend to be volatile because they're pretty much, in the short-term, commodity-like.

And speaking of that, the next one is are commodities the next big opportunity, should I invest in them or are they too risky? Well, let's think about that for a second. Going back to what I was saying before, let's take a commodity, copper. Copper is what copper is. It is really, really hard to think that copper is something other than that metal that you know. Can you speculate on it? Sure enough. Are you really good at timing things like that? Well, if you really are, you probably don't need any advice from me about anything. But not very many people are. Most people are lousy timers.

Is there going to be in the most common commodities that make up the greatest market value of the world of commodities, going to be some surge that's different, new, unusual? No. Will there be speculation? Yes. Will there be volatility? Yes. If you can time all that stuff, have fun. On the other hand, there is a different discussion about specialty commodities, rare earths and all of these things. Things that impact specialty niches and production. Pricing there is one that gets very tricky, tied to what manufacturing costs are around the world and the demand for them.

Shortages can turn into bottlenecks, which can lead to higher prices, which then tend to get met over time with the production of more, which tends to overshoot the mark. And again, you go back to the fact that they're speculative and unless you're really good at timing things, which, you know, think about it. Just step back and think about it. Did Warren Buffett ever try to do this? No. Did Sir John Templeton ever try to do this? No. Can you think of any legendary investors who were good at ever doing this over and over again? No, I can't. Maybe you can. But the reality is, if you can time this kind of stuff, you don't need any advice from me.

Finally, besides the stock market, which I've always talked about as a good leading indicator, what is the next best leading indicator? So, let me just take a step back from that. If you look at cap weighted indexes of the global stock market, we haven't had them that long in history. And the data that exists on them is the last 30 years roughly, and then back dated. Earlier than that, we have the S&P 500. Earlier than that, we have the Dow Jones Industrial Averages. Few people were using the S&P 500 as a major index in the mid-1960s. I'm going to talk a little too long here. I love this topic.

Legendary economist Paul Samuelson famously said in the middle 1960s, something that people have reinterpreted more recently. He said that, "Nine out of the last five recessions were predicted by the stock market" being facetious about the stock market's predictive power. He was using the Dow for that. If instead you'd use the S&P 500, it would have been seven of the last five and so, people have started saying that. Okay, what all those people miss, is that if the S&P 500 is hitting new highs and going up, recessions don't start until three, four, five months after that. It's a good timing indicator when it's going up. It's got a pretty much perfect record. Perfect as perfect can get. If you want to get more perfect, you go to the World Index. If you want to get even more perfect, you go to the Morgan Stanley World Index. Because, we don't have US recessions unless there's a recession going on in the non-US world, in total.

Some countries can go into recession, little ones, on their own, by screwing up. But the fact of the matter is, if we're going to go into recession in America, the totality of the non-US world will also be in recession. So the Morgan Stanley All World, which covers 47 countries, half of which are emerging markets, half of which are developed, the developed world that's in the MSCI World Index. When it's going up, hitting record highs, you don't have to worry about recession for a long time. It is the best indicator in that regard. That's why I always talk about it as a leading indicator.

The S&P 500 has been in the conference board leading economic index series since its beginning, because the stock market itself, by the S&P 500, is a pretty good indicator. The second best indicator is not the conference board’s leading economic Index series, because it's got a lot of wonky parts in it. Among the ten indicators that it uses that get "wonkafied", if you'll accept that phrase, by weird things like building permits, which are included, get "wonkafied" by bizarre changes in weather, changes in regulation. If you look last year in the United States of America, the land of the free and the home of the brave, the building permit numbers were down 3.5%. It's just one component, but it's obviously wasn't very good leading indicator component because the US economy grew relatively well.

The one that’s the best one is shifts in the yield curve, not the absolute level. Yield curve being short-term interest rates versus long-term interest rates. Normally upward sloping, sometimes short rates are above long rates, called inverted. But the more it's doing this, getting steeper, the shift in the yield curve is the second best indicator. It tends to be a leading indicator of how eager banks will be to lend. And as banks become more eager to lend, that tends to buoy the economy. So, stock market is singularly the best. Shift in the yield curve is the second best.

Thank you for listening to me. I hope you enjoyed this month's mailbag. Send in questions. I'd be delighted to try to answer them next month, or the month after, or the month after. I like doing it. Take care. Have a good month.

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Naj Srinivas
That was Ken Fisher answering listener questions as part of his monthly mailbag. Thanks to Ken for sharing his insights with us.

If you want to learn more about the topics discussed today, you can visit the episode page of our website, Fisher Investments.com. You'll find a link to that in the show description. While you’re on our website, you can also subscribe to our weekly digest, which rounds up our latest commentary and delivers it right to your inbox every week. And if you have questions about investing or capital markets that we can cover in a future episode of Market Insights, email us at marketinsights@fi.com.

We'd love to hear from you, and we'll answer as many questions as we can in a future episode.

Until then, I'm Naj Srinivas. Thanks for tuning in.

Disclosure:
Investing in securities involves the risk of loss. Past performance is no guarantee of future returns. The content of this podcast represents the opinions and viewpoints of Fisher Investments and should not be regarded as personal investment advice. No assurances are made we will continue to hold these views, which may change at any time based on new information, analysis, or reconsideration. Copyright Fisher Investments.