Latest / Best of Business / Sam Dickie: Fisher Funds expert on the turbulent outlook for 2024

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Sam Dickie: Fisher Funds expert on the turbulent outlook for 2024 · Best of Business

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  Speaker 1: You're listening to a podcast from News Talks. The'd be
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• 0:16
  Speaker 2: Now.
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  Speaker 3: The market came into twenty twenty three convinced there would
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  Speaker 3: be a global recession, and then the market came into
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  Speaker 3: twenty twenty four convinced there would be a soft economic landing,
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  Speaker 3: and then a few weeks ago the market got very
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  Speaker 3: nervous about growth again, and now it seems like we're
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  Speaker 3: back to a soft landing again. What on earth is
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  Speaker 3: going on? Sam Dickey is from Fisher Fund.
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  Speaker 2: Sam, Hey here, how's it going? Very well?
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  Speaker 3: Thank you? And so what are we feeling this week?
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  Speaker 2: It is hard to keep up. And the good news
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  Speaker 2: is this week the market is convinced we are going
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  Speaker 2: to have a soft economic landing, And just to remind ourselves,
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  Speaker 2: if that is achieved or said, another way of recession
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  Speaker 2: is avoided. What the US Federal Reserve and other central
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  Speaker 2: banks around the world have achieved is kind of like
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  Speaker 2: landing a seven four to seven on a pinhead. So
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  Speaker 2: that rate ride cycle we saw in twenty two and
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  Speaker 2: twenty three was the fast and fastest than forty years,
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  Speaker 2: and to not cause a big turn in the employment
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  Speaker 2: cycle to not cause a sharp slow down in economic
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  Speaker 2: growth is quite astounding.
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  Speaker 3: Is this kind of volatility and how we feel and
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  Speaker 3: what we're expecting unusual? It feels like it is.
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  Speaker 2: It's very unusual. And to give you some context there,
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  Speaker 2: if we look back over the last thirty years or so,
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  Speaker 2: and you look at the entry year, so from January
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  Speaker 2: one to December thirty first variability and say US economic
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  Speaker 2: forecasts before we finally land on a number for the year,
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  Speaker 2: the current forecasting era, or volatile, is three to four
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  Speaker 2: times as much as normal.
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  Speaker 3: What is causing this? Sam? Why are we being so
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  Speaker 3: volatile here?
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  Speaker 2: It's still an overhang. The entire global economy stopped after
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  Speaker 2: being running, after being set around to precision for many
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  Speaker 2: many years. Interest rates will cut to zero around the world,
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  Speaker 2: and below zero you might remember back it's sort of
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  Speaker 2: twenty twenty, and then we had inflation. We had the
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  Speaker 2: fastest rate rise in four decades, and the after shops continued.
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  Speaker 2: I'm still astonished that global companies can operate well with
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  Speaker 2: that backdrop.
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  Speaker 3: So can we put it down simply to just being
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  Speaker 3: an uncharted territory and we don't really know what to expect.
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  Speaker 2: That's yeah, that's basically what's happening here. It's very unusual
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  Speaker 2: a sort of behavior.
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  Speaker 3: Okay, So where are we in terms of what we're expecting,
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  Speaker 3: let's say in the US at the moment.
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  Speaker 2: Probably the simplest way to answer that is Gold and
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  Speaker 2: Sacks cut their probability of a US recession about two
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  Speaker 2: or three days ago at any time in the next
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  Speaker 2: twelve months or so, from twenty five percent chance to
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  Speaker 2: a twenty percent chance, which is near the lowest probability
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  Speaker 2: we've seen in the last two or three years. And
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  Speaker 2: then you think about what's driving that low likelihood of
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  Speaker 2: a recession. It's the US consumer consumptions around seventy percent
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  Speaker 2: of the economy over there, and retail sales are still
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  Speaker 2: growing really strongly.
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  Speaker 3: And where are we at with let's say Europe?
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  Speaker 2: So yeah, and on the US, by the way, we
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  Speaker 2: were expecting two and a half percent growth. That's softened
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  Speaker 2: a bit to two percent, but that's still very far
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  Speaker 2: from a hard landing. The Eurozone is a bit more sluggish,
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  Speaker 2: is often the case with Europe. Even those growth expectations
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  Speaker 2: have been getting revised up this year, and that block
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  Speaker 2: is expected to grow about one percent this year.
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  Speaker 3: And then China.
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  Speaker 2: China is always interesting. You and I have talked many
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  Speaker 2: times before about the challenges of too much debt, addiction
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  Speaker 2: to infrastructure spending, properly spending, an aging population. Earlier in
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  Speaker 2: the year, we talked about how bearish sentiment was here
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  Speaker 2: there in the fact they'd sort of got the three
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  Speaker 2: bazookas out, so they were cutting monetary policy, they were
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  Speaker 2: driving fiscal policy, and they were making the sort of
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  Speaker 2: macro prudential measures around properly much easier. And that did
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  Speaker 2: see the market rebounded a bit, but I think the
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  Speaker 2: conclusion still was saying there that they haven't addressed those
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  Speaker 2: big imbalances.
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  Speaker 3: Sam gosh, it feels like it's really hard to draw
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  Speaker 3: lessons for investors, I guess, given that this is basically
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  Speaker 3: about flying blind. But are there lessons here?
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  Speaker 2: I think it's just a reminder that forecasting macro economic
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  Speaker 2: conditions is always hard, but it's especially so now, and
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  Speaker 2: long term investors should typically not switch their portfolios around
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  Speaker 2: depend on the perceived mecroeconomics flavor of the day. And
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  Speaker 2: Peter Lyncher, a very famous investor, said there has been
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  Speaker 2: more money lost by investors preparing for a recession or
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  Speaker 2: second guess whether there's going to be a recession or not,
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  Speaker 2: than actually in the recession themselves. So said another way,
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  Speaker 2: stay invested in high quality companies with wide economic motes
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  Speaker 2: and long growth runways, almost irrespective of the economic outcome.
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  Speaker 3: Sam, thanks so much for running us through that. Really
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  Speaker 3: appreciate advice. The advice is Sam Dickie for your funds.
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