3 Things You Need to Know This Week | April CPI, Prediction Markets, Financial Fraud

Transcript

Paige Tyson:

Hello, and welcome to 3 Things You Need to Know This Week. Our regular series, designed to help you sift through the noise across financial media and understand what really matters for markets. To stay up to date with our latest market insights, subscribe to our YouTube channel or visit FisherInvestments.com. And with that, here are three things you need to know this week.

First, US April inflation.

On Friday, the Bureau of Labor Statistics will release April Consumer Price Index data. The primary concern among investors for April's reading is the effects of the Iran conflict. In March, headline inflation accelerated to 3.3% year-over-year, from 2.4% in February. The increase in March was largely driven by energy price increases caused by the war in Iran, and expectations are for another acceleration in April. And some may fear a 2022 repeat. But several other factors contributed to that year's hot inflation, like lingering Covid lockdowns, supply chain constraints and increased money supply. We aren't discounting the pain that many consumers are feeling right now as prices rise, but sustained high inflation is fundamentally a monetary phenomenon, driven by an oversupply of money relative to goods and services. Increases in energy costs don't directly influence the money supply. They simply redirect the flow of money as consumers are forced to make substitutions. Today, money supply growth looks fairly tame and in line with levels that have supported moderate inflation in the past. Absent a large spike in the money supply, we don't expect inflation to rise much further from here.

Next, prediction markets.

Prediction markets, where individuals can bet on anything from election outcomes to the weather, have been getting more attention lately. The topic gained even more attention after the Senate unanimously voted to ban themselves and their staff from using these markets. So, what are prediction markets and do they represent a new set of investment opportunities? We would say no. These markets are essentially a form of gambling. According to recent reports, just 0.1% of accounts on two popular prediction market websites generated 67% of the profit since November 2022. And on the flip side, 70% of users lost money. And since these platforms are relatively new, regulatory oversight and enforcement is still limited and evolving. Therefore, we caution investors to consider the risks before placing such bets. But we do think these platforms can provide value as a tool to gauge sentiment. Your typical sentiment survey asks people how they feel, but how people feel and how people act can be very different. For example, consumers can say they feel pessimistic about the economy and yet still go out and spend as usual. And prediction markets are a way for people to vote with their dollars. If someone is willing to risk actual money on an outcome, that can mean they hold a stronger conviction in that outcome. Participants aren't necessarily betting on what they know unless they're using insider knowledge, which regulators are just starting to crack down on. Rather, they're betting on what they think and what they hope. That's why prediction markets can still be wrong. But we think they capture collective expectations more dynamically than traditional surveys.

Finally, protecting yourself from financial fraud.

The unfortunate reality is that financial fraud is a growing threat, and AI has made scammers more sophisticated than ever. In 2025 alone, the US Federal Trade Commission reported $15.9 billion in consumer losses, up from $12 billion in 2024. Investment related scams solicited over social media are one of the most pervasive scams, accounting for $1.1 billion in losses. Recent headlines have hyped the risk of scammers using AI to exploit weaknesses in companies cybersecurity, but the reality is that losses from scams don't just happen from hackers forcing their way into computer systems. Often, it's consumers themselves handing over their information or money without even realizing they've fallen for fraud. So, what should investors watch for? There are a few consistent patterns. Scammers often impersonate trusted organisations like your bank, the IRS, or a government agency reaching out through unofficial channels such as phone calls, texts, emails, social media or messaging apps. They typically claim there's an urgent problem or a prize that's just out of reach. Then, pressure you to act fast before you have time to verify. They often demand payment in unusual forms like cryptocurrency gift cards or wire transfers. Fraudulent communication also tend to share three common traits: They're unexpected, unsolicited, and urgently ask you to do something. Protecting yourself comes down to a few disciplined habits. Resist pressure to act quickly. Never share personal or financial information in response to an unexpected request. Verify the sender's identity through official channels before clicking links or returning calls. And if something feels off, pause and talk to someone you trust, whether that's a financial professional, a family member or a close friend. A second opinion can save you significant trouble. The same principles that guide long-term investing apply here. Scammers count on fear and confusion to do their work, but informed patient investors are far harder targets.

And that's it for this episode of 3 Things You Need to Know This Week.

For more of our thoughts on markets, check out This Week in Review, released every Friday. You can also visit FisherInvestments.com. Thanks for tuning in, and don't forget to hit "Like" and "Subscribe."