Personal Wealth Management / Expert Commentary

Ken Fisher Explains Whether Supply Chain Shortages Spell Trouble for the Economy

Ken Fisher discusses the potential stock market impact tied to shortages in semiconductors and materials like lumber and steel. Many fear these shortages could drive sustained price increases, leading to strong inflationary pressures that could impede economic growth.

Transcript

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so a lot of people worry about
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the question of whether what's been
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going on just recently
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with materials and semiconductors things
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like lumbered steel
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in terms of pricing and what appear to
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be shortages
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uh speak badly for the economy moving
0:21
forward and there's a yes and a note of
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that
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the and some causality behind it as well
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the the fear that many have is of a
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rampant inflation
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in a world that's over hot in this
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regard
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and that the shortages can impede growth
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and in fact the shortages can impede
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growth
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shortages can always impede growth but
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these shortages come from a very simple
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feature
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which is that not so much the
0:53
semiconductor firms
0:55
but more particularly the materials
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firms
1:00
when covet hit just over a year ago
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in mass
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vendors in these categories anticipating
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a very slow economic bounce back or
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no bounce back at all from that which
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was widely banded at the time as
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this thing that would be so much worse
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economically than it's been for so much
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longer
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to shut down capacity now sometimes when
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you shut down capacity you do it in a
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way that's going to make it a permanent
1:35
shutdown sometimes you do it in a way
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that's going to make it a temporary
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shutdown
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i don't care what you do either way it
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takes longer to shutter them
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than it does to reopen them and hence as
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the
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economic rebound was so much faster
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than any of these firms anticipated
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and the bounce back in that v like
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pattern we talked to you about a year
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ago
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plus came on so strongly
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they're caught without capacity so yes
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they raise prices
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yes they're shortages seemingly as the
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economy strong when it isn't wasn't
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expected by them to be strong and
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they're short of
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capacity with these strengths to the
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extent they can
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they'll add capacity and as will the
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semiconductor industry but all
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of these things take a long time to to
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to build and as they take a long time to
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build the permitting and the
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environmental stuff
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and on and on and on before you can add
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plant capacity
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and in doing that this is going to end
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up
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in some ways impeding parts of growth
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but it's inherently not inflationary
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because inflation is about an
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overall macro phenomena which
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shows some numbers that confuse people
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now because the year-over-year
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comparisons seem big but people forget
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that those comparisons about right now
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are comparing against a year ago when
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those same prices were actually
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depressed
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so you're comparing normalized prices to
3:02
previously depressed prices
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and in that what this really does is
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slows down
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growth with pressures in some part of
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the economy
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that impede growth taking away pressures
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in other parts of the economy
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and is indicative of
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what actually is a slower growth economy
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it's not too hot not too cold in a lot
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of ways it's not a bad economy with some
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parts in it which are bad
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subscribe to the fisher investment
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3:36
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[Music]
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you

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