Weekly Wrap-Up

Last Week In Markets: Apr 20 - Apr 24, 2020

Fisher Investments recaps the biggest market, political and economic news from last week, including Markit Purchasing Manager’s Indexes and Japanese inflation.

Global markets seesawed, but ended down -0.8% for the week. In the US, Congress passed a fourth fiscal aid package, which now awaits President Trump’s final approval. The package, worth nearly $500 billion, aims to replenish the recently depleted Paycheck Protection Program, which provides loans to small businesses. The scale of recent fiscal actions is significant, leading to fears of runaway debt risking eventual economic ruin, but we believe focusing on absolute debt amounts and comparisons to GDP is a mistake. Instead, we prefer to compare interest payments to tax revenues. This comparison provides a clearer measure of debt’s affordability and has been far higher for the US in the past without causing a debt disaster. For more, please see our 04/24/2020 article, “What Rising Deficits Mean for US Debt.” US economic data releases continued to reflect the expected fallout from ongoing business closures. April Markit flash services and manufacturing purchasing managers’ indexes (PMIs) fell to 27.0 and 36.9, respectively. (Readings below 50 indicate economic contraction.) Initial unemployment claims totaled  4.4 million for the week ended April 18, down from the prior week but still at record levels. March new home sales declined -15.4% m/m and durable goods orders fell -14.4% m/m, both below forecasts.

In the eurozone, Markit April flash services and manufacturing PMIs fell to 11.7 and 33.6, respectively. UK CIPS flash services and manufacturing PMIs fell to 12.3 and 32.9, respectively, in April. UK March consumer prices rose 1.5% y/y, while March retail sales declined -5.1% m/m, missing expectations.

In Japan, April Markit flash services and manufacturing PMIs fell to 22.8 and 43.7, respectively. March export values fell -11.7% y/y and import values fell -5.0% y/y. March consumer prices rose 0.4% y/y, and core-core consumer prices (excluding fresh food and energy) rose 0.6% y/y.

The Week Ahead:

The US and eurozone report their first estimates of Q1 2020 GDP, which are widely expected to reflect contraction. The eurozone and UK post March money supply figures. China releases April manufacturing, non-manufacturing and services PMIs. Japan will publish March industrial production, retail sales and housing starts.

Source for all data cited is FactSet. This update constitutes the general views of Fisher Investments and should not be regarded as personalized investment advice. No assurances are made we will continue to hold these views, which may change at any time based on new information, analysis or reconsideration. In addition, no assurances are made regarding the accuracy of any forecast made herein. Global equities are represented by the MSCI World Index. The MSCI World Index measures the performance of selected stocks in 23 developed countries and is presented net of dividend withholding taxes and uses the maximum rate applicable to non-resident institutional investors who do not benefit from double taxation treaties. Past performance is no guarantee of future results. A risk of loss is involved with investments in stock markets.