Weekly Wrap-Up

Last Week In Markets: Aug 20 - Aug 24, 2018

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

Global equities rose 1.1% as headlines focused on politics. In the US, one former Trump associate was convicted on fraud charges, while another pled guilty to charges of illegal campaign financing and potentially implicated President Trump in illegal behavior. Some headlines are treating these events as a critical turning point in the investigation into 2016’s election—potentially increasing the odds of a Trump impeachment. In our view, it is still too soon to draw conclusions regarding a potential impeachment and basing portfolio decisions on speculation and hearsay is always an error. For more, please see our 08/23/2018 commentary, “On President Trump’s ‘Terrible Day’ and Impeachment Rumblings.” On the economic front, the August Markit manufacturing and services flash Purchasing Managers’ Indexes (PMIs) continued to show expansion at 54.5 and 55.2, respectively (readings above 50 indicate expansion). New home sales missed expectations in July, falling 1.7% m/m. July preliminary durable goods orders decreased 1.7% m/m, also missing expectations.

European economic data were light. The August Markit manufacturing and services flash PMIs were reported at 54.6 and 54.4, respectively. In the UK, the government published more than 20 papers describing what would happen in numerous areas of life should the UK and EU fail to reach an agreement—the so-called “No Deal” scenario. These papers are just the latest example of Brexit negotiations’ slow moving, public pace, further reducing negative surprise potential down the line. Whatever agreement the UK and EU arrive at, we don’t see it sneaking up and spooking markets.

In Japan, core-core inflation (excluding fresh food and energy) met expectations in July, rising 0.3% y/y. August Markit manufacturing flash PMI increased to 52.5 while the July Leading Economic Index declined to 104.7, after a 106.9 reading in June.

The Week Ahead:

The US releases its second estimate of Q2 2018 GDP. The eurozone reports July loan growth and unemployment figures. Japan releases July retail sales and trade data. China announces August services and non-manufacturing PMIs.

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 a Luxembourg tax basis. Past performance is no guarantee of future results. A risk of loss is involved with investments in stock markets.