Billionaire investor Kenneth Fisher said monetary stimulus from the
Federal Reserve is unnecessary and could cause the dollar to weaken and reduce demand for riskier assets such as U.S. stocks.
The Dollar Index, which tracks returns against six major currencies, has dropped as much as 5.1 percent since Aug. 10, when the Fed said it would keep its holdings of bonds level by resuming the purchase of U.S. debt to support a recovery. The Standard & Poor's 500 Index has rallied 4.9 percent since then.
“There's no reason for the United States to be doing quantitative easing,” said Fisher, who oversees more than $38 billion at Woodside, California-based
Fisher Investments Inc. “It increases risk aversion for U.S. stocks. It's got a slight tendency to want to motivate you to underweight U.S. stocks.”
Policy makers should show more confidence that the recovery that began last year will eventually create jobs, and avoid sending signals that may derail it, Fisher said. The world economy will expand 4.8 percent this year, the International Monetary Fund said Oct. 6, up from its forecast of 4.6 percent three months ago. U.S. gross domestic product will rise 2.7 percent in 2010, after last year's contraction of 2.6 percent, according to the economists surveyed by Bloomberg.
The unemployment rate held at 9.6 percent in September, near its 26-year high of 10.1 percent last year, according to the Labor Department in Washington. The U.S. lost more jobs than forecast last month as local governments fired teachers and other workers in response to declining tax revenue.
Leading Indicator
“They are concerned because in the United States employment is lagging,” Fisher said. “The stock market has always been and continues to be one of the better leading economic indicators. What it was saying in March 2009 was economic turnaround ahead. What it was saying to the balance of 2009 was the economy has turned around. What it's been saying through most of 2010 has been an expanding economy, but slower growth than normal.”
The S&P 500 gained as much as 80 percent since falling to a 12-year low in March 2009 as the government spent trillions of dollars to stimulate the economy. The index fell as much as 16 percent from a 19-month high in April on investors' concern that U.S. unemployment and widening budget deficits in Europe could derail global growth. The gauge has risen 15 percent since July 2 as companies reported better-than-estimated earnings.
Fisher, who favors shares of technology and industrial makers, raw-materials producers and companies that rely on consumer discretionary spending, said that neither Europe nor the fears of a double-dip
recession would be able to drive the stock market lower.
“To knock the market down, you'd have to have a new big, bad thing, he said. “We're in a bull market.”
