Personal Wealth Management / Expert Commentary

Do Interest Rate Outlooks Matter? Ken Fisher Answers

With interest rates—both long- and short-term—at low levels relative to history, many investors want to know where interest rates are headed from here.

Because of the central banks’ influences over interest rates, Ken Fisher believes it has become increasingly difficult to predict where interest rates will go moving forward.

Transcript

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when people ask me
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where do i think interest rates are
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going
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i'm often prone to answer with a
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question which is why do you
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think that my opinion even possibly
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matters
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there are so many people so interested
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in interest rates
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short term and long term that any view
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that i have is
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largely superfluous now
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you know that short long-term interest
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rates are low
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historically you know that short-term
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rates are controlled by
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central banks and our country by the u.s
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federal reserve and
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overseas outside of america by central
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banks there
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wherever long-term rates used to not be
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impacted at all by central banks they
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were free markets set
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since the beginning of quantitative
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easing programs
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central banks have tried to impact long
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rates
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to push them down the
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reality of all of this is that it's all
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somewhat artificial
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and will remain artificial for some good
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period of time because the central banks
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are in my opinion more reactors than
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they are
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causers and they react all the same
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stuff that all the rest of us do
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that is they're all very concerned about
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things like the coronavirus
1:22
and elections they don't say they're
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concerned about elections but they are
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and concerned about things like whatever
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congress may or may not do
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and what have you
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so i can't tell you what'll happen next
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month or
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next quarter necessarily even next year
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i will tell you that in the short term
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there's not a lot of reason for long
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rates to go up
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the central banks continue to push to
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try to keep them down they believe
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that's good i believe that's stupid
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but i've never really believed central
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banks were very
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capable in the first place the fact is
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that long rates are a little higher now
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than they were at their low point
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in the summer for this year
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but still well below where they started
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the year at
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and as we look into the future
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eventually we can say but we don't know
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what eventually is
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that long rates will be much higher and
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that there will be a spread between
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short-term and long-term interest rates
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eventually
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which will at least fully compensate
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for whatever future world of inflation
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we have that is if
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if this is short-term rates and this is
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long-term rates
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time goes by longer term longer rates go
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up higher and higher
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that spread ought to fully compensate
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for whatever inflation goes on
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to compensate lenders for the inflation
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that they suffer
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during the time period in which they
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lend their money out
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that hasn't really been true recently
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and that will return eventually
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eventually you should look for long
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rates to go up from here
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fairly markedly at least several percent
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but there's no pressure in the short
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term to do that that anyone can see and
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i wouldn't expect at any time any too
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soon oh and what will they'll be in
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december 31st or what they'll be on
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march 31st i don't have a clue
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so if i were you i wouldn't worry about
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that too much because so many other
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people are worrying about it
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and as they worry about it they're kind
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of doing it for you
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and just assume that this is not a world
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where short all or long rates move a lot
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and accept it for what it is and move on
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subscribe to the fisher investment
3:35
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3:37
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[Music]
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