UPDATE 1-Ken Fisher says signs abound of economic recovery

* Steep yield curve of bonds an ignored sign of recovery

* Nascent middle class in emerging markets a growth driver

* Second year after a bear market bottom always positive

* No sector rotation of leaders a sign rally to continue
(Adds performance of Fisher’s global return strategy)

By Herbert Lash

NEW YORK, April 14 (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
founder 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

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 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.

Fisher Investments’ global total return strategy net of
fees for private clients has gained 56.9 percent over the
previous 12 months ended March 31, compared to 52.4 percent for
MSCI’s World Index and 49.8 percent for the S&P 500.

The composite performance of the strategy, which accounts
for about 80 percent of Fisher’s high net worth accounts, also
outperformed the two benchmarks over the prior three- and
five-year periods.

Stock Report

(Editing by Leslie Adler)

UPDATE 1-Ken Fisher says signs abound of economic recovery