(Bloomberg) -- Taking Stock with Kathleen Hays and Pimm Fox. GUEST: Ken Fisher, Founder of Fisher Investments, on the impact of Brexit and this year's election on capital markets and the global economy.
Rio taking stock continues global business news twenty four hours a day at Bloomberg dot Com, the Radio, plus Globo Last and on your radio. This is a Bloomberg Business Flash from Bloomberg World Headquarters. I'm Katherine Cowdery. The stock market is rebounding from a two day solov sparked by the British vote to leave the European Union. There's optimism that policy makers are committed to limit the fallout from the UK's exit. European Central Bank President Mario Dragi said there is a common responsibility to address the world's economic weaknesses. Both the Bank of England and European Central Bank have pledged to increase liquidity. We check the markets every fifteen minutes throughout the trading day on Bloomberg Radio del Industrial average is of one eighty seven points again and one point one percent, trading at seventeen thousand, three hundred twenty six. SMP five foundered up twenty six points one point three percent to two thousand twenty six, NAZAC hire by eighty points one and three quarters percent, trading at forty seventy four less. Texas in the media. Crude oil up a dollar fifty one and barrel three point three percent to five. It's about goal down eight dollars announced at thirteen sixteen, seventy ten year treasury down six thirty twconds with the yield of one point four five percent. And that's a Bloomberg Business flash. Listening to Taking Stock with Bin Box and Kathleen Hayes on Bloomberg Radio, there's one big question for investors starting around late Thursday night if you're in the US, and early in the morning if you're going into Asian trading, certainly since Friday when we learned, when we realized that yes, the vote to leave the United Kingdom, the Brexit vote one, and we had two days of major declines in stock markets around the world, the pound another huge leg in the bond market, rally joining us down to put it all together and not just look at Brexit, but about the presidential election, about at the Federal Reserve, and and just then what it all means for where you put your money at a time like this or you keep it. Ken Fisher, founder, executive chairman and co chief investment officer at Fisher Investments with nearly sixty five billion dollars assets center management, usually in sunny, beautiful Woodside, California. But joining us in our New York studio today, Well, you know I'm not in Woodside, California. That's where you're in southern California. No, no, no, no, we used to be in Woodside, and in fact, we still have five employees there, but over half of our employees are in sunny Camus, Washington, tied over the border from the Portland or you know that I grew up at Olympia, Washington, I did not. Well, yes, I know Camas very well. Literally, we have a thousand people. Were the biggest private sector employer in the town of Camas. You're a lucky employee. Such a I mean, we can't we could go on on about this obvious. I'm a big fan of Washington State at anyway, can Fisher just showing one more reason why such a Smartphington I am born and rays Yeah, you just sound southernmost tips proud of it. It's the water that makes Olympia beer. By the way, county, well, well it's the state capital. We're gonna do another segment when these stays on Thursday and and what it is now and what it was with Ken Fisher. But today, we've got to get too. Breaks in another part of the world can because what's your immediate reaction. What I've been saying all year long, which the last few days seems to defy, but I don't think it truly does, is that this is a year that started with huge uncertainty about so many topics, and by the time we get to the end of the year will have become a year of irregularly falling uncertainty. And I think this fits into that pattern in that right now there's a lot of polatility about it, and by the time we get to the end of the year, it will mostly be old news. I think there are some things we can say about it that aren't widely said, although there's been much said about it obviously in the last few days from a lot of different angles. And I don't want to be redundant about any of those things. But one of the points is to think about it a little bit from the way, which I don't think people do that either Bernie Sanders or Don Trump might think about it, and uh, not so much the way MS Clinton might think about it. Not that I'm saying good or bad about any of those three people. The first look, I just top you for a second. Are regularly falling uncertainty. So it seems you're saying that over the next six months we're gonna have headline risk. Headlines are going to hit the stock market, the bond market, We're going to see that. But basically, if you look at the trend line June December, we're gonna do that resolve of itself. We know what happens, including the presidential elections, true, isn't it, the Spanish elections, including so many things over the course of the year, we've had some falling uncertainty already. So you know, if you think of the beginning of the year, there was all of the concern about China melting down. China hasn't melted down. There was a concern that we would have a recession in America. GDP stronger than people thought. It's not robust, but it's stronger than people thought. We didn't have the recession, we didn't have the meltdown. We had a huge number of the biggest field ever Republican candidates running for president. There's now a presumptive nominee. There's a little bit of wiggle about what's going to happen with the convention and a vice presidential pick. There's the same kind of stuff on the Democratic side with Mr Sanders wiggling around. That'll all go away. Then you'll have a campaign, we'll get a winner. Will like the winner better than we like that candidate now, even though we may not like that candidate all that much more than now. We always get a winner. The uncertainty will fade all your long. Markets should like that. In the second half of the year and second half of election years in America usually are strong compared to overseas markets because the falling uncertainty in America is bigger during that second half than uncertainty overseas. It should work that way. Okay, so let me ask you some of these things, specifically, a little bit of a boom boom boom going down the list. Okay, at the end of the year, what will what will be the permanent impact of brexit? If anyway we're right now, there's a concern about Italian banks. There's a concern about just what this means that more broadly, at the end of the year, are we gonna see there won't be a financial crisis again, that they'll they'll be the new Prime minister in the UK, they will be negotiating the exit and markets will have their focus off of it. And the big force that people don't talk about now is what I was starting to allude to before, which is the way Sanders or Trump might think about this, which is that before you get to the end of the negotiations on Brexit on both sides of the Channel, the big fish private sector corporate global interests that have huge stakes will have lobbied so hard to the politicians on both sides that most of the worst of things will have gotten mitigated to their best interests, and we'll end up seeing something that may have And this is the biggest risk of Brexit in my opinion. In terms of economic policy, there's another risk as well, as Steve Forbes articulates well, but in in in in economic policy, the biggest risk is unintended consequences in the negotiation. Some big things well intended architected by bureaucrats, perhaps morphed a little bit by some private sector interest in lobbying, and that generates something on toward a little bit like the negative impacts in two thousand seven to nine of f AS one seven I se seven quick summation of what each presidential candidate would mean for the capital markets. Uh, let me just make this simple, and then we can get too complicated. As a general rule in American history that people don't fully appreciate. And this goes back a long way, as it goes back to the beginning of the s and P. Five hundred. In a year where we elect a Republican, the year is much stronger than a year where we elect the Democrat, and then that flips for both of them in the inaugural year. Democrat inaugural initial inaugural years are much stronger than Republican initial inaugural years. The election years the reverse. So if we elect Mr Trump, despite all of the things people have his concerns about him, we should assume that markets are more or benign this year, and you pay for that next year. On the other hand, despite all the things you might say about Ms Clinton, if we elect her, we should have a less robust year this year, and then next year we get the benefit of not having gotten too evulent in the back half of two thousand and sixteen, having not been evulent for a long time. People don't get this, but we're actually right for a little bit of evulence for a while. So for investors, then, what is the takeaway from this? My view would be if you look at a lot of the stocks that you might have thought to own before any of this happened in America that have gotten whacked the most, that's a perfect buying opportunity, Big Strong, or whatever else it is that you particularly liked. Overweight US in my mind, but many may to degree overweight Big Pharma that has building proprietary pipeline by gross stable, mature but still growing tech that is not I'm not talking about exciting tech. You're talking like a Microsoft tech oracle hasn't hasn't done well lately. Normally, these kinds of stocks in the latter stages of bull markets run in spurts, and both of those had spurts, have backed off, likely in the back half of the year, and the year where US is better than form, you get another spurt, and they're the kind of things somebody would normally buy for the last third of a bull market. And this is a long, begrudging bull market. This bull market has been going on and won't quite die, but it doesn't get to that rip roaring, ebulent stage and I'm not suggesting necessarily word about to have that. That's not where I'm going. My point is that normally in the latter part of bowl markets, companies just like that end up doing well in the stock market in spurts. Okay, this is quick. I'm gonna ask you two questions. You've got thirty seconds to answer, So fifteen seconds for the first one. By energy stocks, sell energy stocks. Um, I'd prefer materials non energy to energy. Okay, they capture the same effect, but they're not perceived to. All right, how about banks mightily beaten up the last few days. Again, you have to separate big from small. But if you're talking about big, which is where most of the beat ups, then I think the answer is yes. In particularly US, I guess I can get one more consumer discretionary retail. Some people like it. Now. Again, i'd be focused on making sure you're not going to get caught by the electronic effect. Oh Amazon, Uh, it's the elephant in the room, the very big elephant in the room. Yes, and if you can get free shipping and everything, so that elephant is really very enticing to so many people. Can Fisher sticking around founder executive Chairman and co chief Investment Officer at Fisher Investments. Our stock sitder, Dave Wilson's coming back, Carl Ricka Donna from Bloomberg Intelligence on the eCos side, and we're all going to mix it up coming up on Bloomberg Radio