Sam Dickie: Fisher Funds expert explains why equity markets are falling

Equity markets across the world have taken a dive - and one expert has explained the sudden drop.

Donald Trump's tariff threat and collective concerns about the administration's new Department of Government Efficiency have sparked aversion among experts.

Sam Dickie from Fisher Funds explains further.

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Episode Transcript

Speaker 1 (00:00):
Right now. We have been telling you for weeks there
are a couple of big risks to the economy. A
couple of those roosters are coming home to roost. I
think I've said that wrong now. The risks are policy uncertainty.
We've also been talking about excess retail investor enthusiasm, so
many more things. Now, where are we at and what

(00:23):
does all of it mean for investors? Sam Dicky is
with fisher Farms. Sam, good eating to you.

Speaker 2 (00:27):
Good evening.

Speaker 1 (00:29):
Tell me equity markets have fallen a handful of a
percent in the last couple of weeks. What's going on?
What are you putting it down to?

Speaker 2 (00:37):
Yeah, you're right, Ryan, So they have been under a
bit of pressure, and it is because several of those
risks you and I have been talking about playing out,
rearing the head coming home to roost, as you said.
So the exceptional policy uncertainty, so not just the will
he won'ted tariff noise, but uncertainty around how the DOGE
or Department of Government efficiency inspired federal government cost cutting

(01:00):
could be a drag on the economy. There's the escalating
US versus trying a computer chip bore, the extraordinary amount
of capital that the largest tech companies in the world
are spending right now with uncertain return on that capital.
And finally, there's the animal spirits we've talked about, or
irrational exuberance that had crept into the market since Trump's election.

Speaker 1 (01:22):
They seemed to take all the upside of Trump He's
going to cut taxes, he's going to cut regulation, and
ignore all the potential downside i e. The terwiffs. It's
almost like the markets didn't really take him seriously that
he would actually do it.

Speaker 2 (01:38):
That's right, I think, you know, memory muscle memory is powerful.
So people remember last time that when he was elected,
everyone was quite bearish. He actually did a pretty good job,
and equity markets were up sort of twenty one percent
in the year following his election. However, the starting points,
as you say, were very different. Last time, the market
was much cheaper, the expectations were very low, and he

(01:59):
sort of over that pretty low bar. This time around,
expectations were super high, and as you say, all the
upside was priced in without a lot of the risk,
and those risks are kind of manifesting now we're right
in the thick of it. So if you think about
some of those risks. US policy uncertainty as near as
high as it's ever been since we started measuring it

(02:19):
sort of fifty years ago. According to business surveys in
the US, US trade policy is the highest it's ever been.

Speaker 1 (02:25):
Oh sorry, trade.

Speaker 2 (02:26):
Policy uncertainty is the highest it's been in fifty years.
So set another way, imagine sitting in a boardroom ryan
in the US, Southeast Asia, or even Mexico or candidate
and being asked to sign off on a huge capital
project or a three year strategy document with this type
of sort of fifty year high uncertainty, and at the
very least I think it would give you pause. So

(02:48):
when we think about the drag on the economy, is
this actually manifesting? It really is?

Speaker 1 (02:53):
It's early days.

Speaker 2 (02:54):
So if you think of something like economic surprise, which
tracks you know, every piece of key economic data in
the US when it comes out, does it surprise people
on the upside or downside? A couple of months ago
that was surprising sharply positively. Now that's surprising sharply negatively negatively.
So we might be seeing some of these risks actually

(03:15):
start to manifest in a slow down in growth.

Speaker 1 (03:18):
Is this at this point having more of a shock
to those indicators you're describing than COVID.

Speaker 2 (03:28):
No, the I think, I thank COVID was a one
and one hundred year event and then you know, fifty
percent of the world's economy came to a grinding holt.
I think this is more mild, much more mild. It's
just that, you know, running into this from US, say
a month or two ago, expectations were very high. So
we had, you know, sentiment gauges, retail sentiment gages running

(03:51):
red hot. We had a lot of irrational exuberance in
the market. As you say, all of the good news
that Trump had talked about was pricing, none of the risks.
So it's more about the starting point in terms of
the actual drag on the economy versus COVID.

Speaker 1 (04:04):
That's much much more mild. And what does it mean
for investors then going forward? Do you? I mean, if
you're a business, let's take because investors are basing their
decisions off what they think the businesses are going to do. Right,
So if you're in business and you're not wanting to
throw your money at this, or throw your money at that,
or buy the new plant, or hire the new person,
because it's uncertain. I mean, at some point, if uncertainty
is constant, you get used to it and you invest anyway,

(04:25):
don't you.

Speaker 2 (04:27):
I think that's right. I think people will at the
very least, this will be an excuse for people who
are going to sign off on a marginal project to
take a wait and see approach. However, I do think
and by the way, it never does feel good as
an investor when these risks are coming home to roost
or plan out, as you said. But the good news
is there is a lot less irrational exuberance than the

(04:47):
market today than was it a month ago. So those
sentiment engages that were red hot have gone to more normal.
And I guess when you think about whether you're going
to sign that check or not for that three year
capital project, I do think of this un does start
to drag on the economy too much, and it becomes
very evident that to Trump himself, that he is intentionally

(05:07):
hurting the US economy. I do think that a reasonable
base case is that rationality will prevail and maybe some
of these things will be reversed. And we saw that
again last night when he buttoned off again on these
tariffs and the stock market rally very sharply. So for now,
the good news is that a lot of these risks
we're talking about are coming home to roost. They have
partially played out, and the sentiment has gone from red

(05:30):
hot over at SKIS to sort of more normal.

Speaker 1 (05:33):
Sam. Thank you for that really interesting stuff. Sam Dicky
Fisher funds with us Tonight.

Speaker 2 (05:37):
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