Personal Wealth Management / Market Analysis
Ken Fisher on Jerome Powell’s Reappointment and What It Means for Markets
Fisher Investments’ founder, Executive Chairman and Co-Chief Investment Officer Ken Fisher discusses how Jerome Powell’s reappointment as Fed Chair will affect stocks. According to Ken, the role tends to dominate the person more than the person defines the role. While Ken believes all central bankers make plenty of mistakes, most remain fairly “vanilla” throughout their tenure. Ken says the effect of Powell’s reappointment is likely to be relatively benign for stock markets.
The uncertainty associated with a new Fed head often stokes some investor concern, while the reappointment of an incumbent tends to bring comfort. While Powell does bring experience, it is inevitable that he will make mistakes—like any other central banker. However, based on the nature of the role, Ken says you shouldn’t expect anything too great nor too bad to happen under his watch.
Title screen appears, “Ken Fisher on Jerome Powell’s Reappointment and What It Means for Markets”
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A banner identifies him as Ken Fisher, Executive Chairman and Co-Chief Investment Officer, Fisher Investments.
Ken Fisher doing hand gestures time to time explaining.
Ken Fisher: As I think all of you know, the President has said that he does want to continue Jerome Powell as head of the US. Federal Reserve. And many people ask the significance of that. There's always a certain amount of concern about a new head of the Fed in terms of what a new head of the Fed would do, and therefore a certain comfort in the old one being reappointed.
Ken Fisher: I'm just going to say to you that if you've heard me in the past, pretty much anytime ever, I've been derogatory about heads of central banks, I basically believe that the role is one that is bigger than the person, that the role is one that formulates the person, and that the person's actually not so terribly important. If you expect someone to be a great head of the Fed, you should probably get over it. If you expect them to be a terrible head of the Fed, you should probably get over it. The fact is they tend to be fairly vanilla, and they tend to do a lot of stupid stuff because that's what the function is.
Ken Fisher: William McKesson Martin was the head of the Fed longer than anyone else ever in US history in the period of the 50s up into 1968 and had a famous line that was popular when I was young, 50 years ago. Which was that when you become the head of the Fed, you take a little pill, and it makes you forget everything you ever knew. And it lasts just as long as you're head of the Fed.
Ken Fisher: I think Martin's little pill is actually one that lasts longer than when they're head of the Fed, because after they're head of the Fed, they tend to not ever think they made a mistake. But the fact is, it's really hard to find central bankers that aren't made by their times as opposed to them making the times. And Jerome Powell, he hasn't been a terrible head of the Fed, he hasn't been a great head of the Fed. He's made a lot of mistakes. They all do. It's the nature of the beast.
Ken Fisher: Because the role, and not just our central bank, the Federal Reserve, the same is true in my opinion, for all major central banks. They tend to have the role dominate the person, not the person dominate the role. And in that, if the President hadn't appointed Jerome Powell, there would have been a certain consternation about who he might have picked instead. And this is always something people get all a titter about. But after that person was in the saddle, if you will, they'd get used to that person and there'd be no more fears.
Ken Fisher: The role is one that is more dominant than the person. You should not expect anything great or bad to happen because of Jerome Powell in the saddle as head of the Federal Reserve. Thank you for listening to me. Thank you for listening to my consistent droll, fairly negative view about the role of central bank heads.
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A series of disclosures appears on screen: “Investing is Securities involves a risk of loss. Past performance is never a guarantee of future returns. Investing in foreign stock markets involves additional risks, such as the risk of currency fluctuations. The foregoing constitutes the general views of Fisher Investments and should not be regarded as personalized investment advice or a reflection of the performance of Fisher Investments or its clients. Nothing herein is intended to be a recommendation or a forecast of market conditions. Rather it is intended to illustrate a point. Current and future markets may differ significantly from those illustrated here. Not all past forecasts were, nor future forecasts may be, as accurate as those predicted herein.
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