Ken Fisher Discusses Inflation, Sell America, US National Debt and More
Ken Fisher addresses common investor concerns including inflation as a recession indicator, US policy unpredictability, the 'Sell in May' strategy, and the national debt. He argues that current inflation is not alarming by historical standards, that national debt levels are not yet problematic, and that waiting for clarity in markets is a costly mistake.
Summary
Ken Fisher opens by cautioning that waiting for market clarity is expensive because markets move before clarity arrives. He then addresses four main questions submitted by viewers.
On inflation and recession: Fisher argues that looking backward at inflation or job numbers is not predictive of future recessions. He notes that current inflation levels — around 3% in the US — are actually below the averages seen over much of the last 50 years. He attributes lingering inflation fears to the post-Covid period when central banks increased money supply dramatically, causing 25–35% cumulative inflation in a few years. He argues that tightening monetary policy to fight high inflation could cause recession, but that current conditions do not warrant that concern.
On US investability and policy unpredictability: Fisher acknowledges that unpredictable US policy — tariffs, geopolitical moves — could theoretically matter, but argues that the US represents only about 25% of global GDP and that unpredictability exists throughout the world. He suggests the US economy has remained fundamentally steady despite political noise, and that policy unpredictability may be more perception than reality.
On 'Sell in May': Fisher dismisses this as 'mumbo jumbo nonsense,' pointing out that when properly calculated using indexes like the S&P 500 or the MSCI World Index, returns during the May–October period are actually net positive historically. He warns against letting a few extreme negative outcomes skew one's perception of what is normal. He also notes that stocks tend to rise before midterm elections — what he calls the 'Midterm Miracle' — making any sell-and-wait strategy counterproductive.
On the national debt: Fisher contends that the US national debt, while nominally large at $38 trillion, is not at problematic levels for a developed nation. His key argument is that if the debt were truly dangerous, long-term US interest rates would be far higher as lenders demanded greater compensation for default risk. He acknowledges that future risk is possible but argues it is not relevant to stock, bond, or GDP performance in the near term.
Key Insights
- Fisher argues that current US inflation at ~3% is actually below historical averages for much of the last 50 years, and that lingering inflation fears are a psychological hangover from the post-Covid period when central banks caused 25–35% cumulative inflation globally.
- Fisher claims that properly calculated global indexes like the MSCI World show net-positive returns during the May–October period historically, directly contradicting the 'Sell in May, go away' premise even when accounting for extreme negative outliers.
- Fisher uses long-term US interest rate levels as his primary evidence that the $38 trillion national debt is not yet problematic — arguing that if debt were truly risky, bond investors would be demanding much higher yields to compensate for that risk.
- Fisher contends that backward-looking economic indicators like inflation data and job numbers are not predictive of future recessions because they reflect the past, not what lies ahead.
- Fisher argues that US policy unpredictability is partly 'in the eyes of the beholder' and that, at the aggregate economic level, the US has remained 'pretty darn steady rolling' despite political noise and unconventional policy moves.
Topics
Transcript
[0:00] Well, first off, let me just say that if you're waiting for clarity, the stock market's a very expensive place to get it because the stock market always moves before you get clarity. So, every month I get questions sent in to me and I try to answer them, quickly, which every month I fail at because I'm not very good at saying things quickly. I can talk very, very fast if I have to speak really fast and make mumble jumble out of everything. But in reality, I'm a kind of a plotter [0:33] when it comes to explaining things. So, this month's first question, "Isn't high inflation and a worsening job market an indicator for a recession?"…
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