Ken Fisher says signs abound of economic recovery

By Herbert Lash

NEW YORK (BestGrowthStock) – Skepticism about recovery obscures a number of signs that prove otherwise, especially the driving force that emerging markets now command in the global economy, billionaire investor Ken Fisher said on Wednesday.

Fisher, the Forbes columnist who has been tagged a perma bull by critics, said markets have failed to take into account the big spread between short- and long-term interest rates, a classic indicator of an economy on the verge of recovery.

Skeptics also ignore the amount of junk bonds sold in the first quarter, Fisher said in an interview. Sales of U.S. junk bonds surged to $61 billion from $11 billion a year earlier, according to Thomson Reuters data.

“People are snarky. The nature of a bear market is that it creates skepticism,” said Fisher, who oversees $40 billion as chairman and chief investment officer of Fisher Investments.

Investors and the broad public do not view optimists as heroes and are fixated on the downside, failing to see all the signs that the global economy is doing very well, he said. Who was right calling the bear market garners more attention than who was right calling its end.

“People are still in the mode of focusing on who was right from mid-2007 to March of 2009, they’re not today focused on who’s been right for the last 15 months,” Fisher said.

Data shows that since the late 19th century the total return of stocks, which includes dividends, has always gained in the second 12 months after a bear market has bottomed, he said.

On a price-only basis, stocks failed to gain in the second 12 months after the trough only once, in 1932, he said.

Wall Street rallied on Wednesday, with the broad S&P 500 charging past the key psychological barrier of 1,200, as U.S. stocks (Read more about the stock market today. ) advanced for a fifth straight session on better-than-expected earnings at Intel Corp (INTC.O: ) and JPMorgan Chase & Co (JPM.N: ).

The latest economic data continued to surprise on the upside, too. U.S. retail sales rose 1.6 percent in March. And China’s economy (Read more about the fastest growing economy.) grew a faster-than-expected 11.9 percent in the first quarter from a year earlier, the fastest annual pace in nearly three years, two market sources said, a day before China is scheduled to publish its first-quarter GDP growth rate.

The world is being led by growth in emerging markets, which now account for about one-quarter of global gross domestic product as a growing middle class consumes, Fisher said, noting that the U.S. economy makes up only 23 percent of world GDP.

While emerging markets outperformed over much of the past decade, Fisher sees that cycle near an end, saying the signal will be when everyone is talking emerging markets.

He blew off fears that Greece’s debt woes could spread across southern Europe, scoffing: “And then after that the aliens come?”

Greece has been unwilling to pay up to meet the demands of investors who should see the country the same as lower-quality corporate debt, he said, adding, “Greece is trivial.”

Record inflows into bond funds are a sign of the pessimism and disbelief of economic recovery that has taken hold of many people, who mistakenly seek “clarity” to make their move.

“Clarity is one of the most expensive things in the world to wait for. People have a perverse desire to buy high, sell low,” Fisher said.

“The world is doing really nicely. Good things are popping up everywhere,” he said.

Industrials, materials and technology have led the rally. Rotation of the market’s leadership will signal a new phase, Fisher said, while industrials, health care — with its inelastic demand — and consumer discretionary stocks will lead in the future.

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(Editing by Leslie Adler)

Ken Fisher says signs abound of economic recovery