Fearful of a recession? Top strategist and Forbes columnist Kenneth Fisher says to take a step back and relax.
In his latest column, Fisher talks about the recession-forecasting prowess of the Leading Economic Index, developed decades ago by Wesley C. Mitchell of the National Bureau of Economic Research. “Modified minutely since then, it has always fallen many months before any recession — always!” Fisher writes. “A fall doesn’t ensure we’ll have a recession, but if it doesn’t fall, we won’t. It’s high and skyrocketing now — and rising in the other 11 countries and Europe for which it’s calculated. So relax! Believe in it, not the nonsensical, fear-based babble you hear. The LEI don’t lie.”
The LEI has ten simple components, “none of which, ironically, is government spending”, Fisher says. Those components include rate spreads and the S&P 500 itself. Fisher says he thinks the bull market will continue. He talks about why he doesn’t like energy stocks right now, and why he does like drug stocks, offering several picks. Among them: Gilead Sciences.