Weekly Wrap-Up

Last Week In Markets: Dec 09 - Dec 13, 2019

Fisher Investments recaps the biggest market, political and economic news from last week, including US-China trade discussions, UK general election results, Japanese GDP growth, and Chinese economic data.

Global equities rose 1.0% amid progress made on US-China trade discussions and reduced uncertainty regarding Brexit. In the US, November core consumer prices (excluding food and energy) increased 0.2% m/m and retail sales grew 3.3% y/y. The Fed kept its fed-funds target range unchanged at 1.5% – 1.75% at its final meeting of the year on Wednesday. On Friday, President Trump’s administration and Chinese officials announced a preliminary trade deal in which the US would cancel threatened new tariffs on $156 billion of consumer goods set to take effect on December 15 and China agreed to make some new structural economic reform changes and purchase $50 billion of US agricultural products. Separately, the US House Judiciary Committee approved two articles of impeachment against President Trump, which the full House of Representatives will vote on next Wednesday. The vote is likely to pass given the Democratic Party controls the House and only a simple majority is needed for passage. However, the impeachment trial would then progress to the Senate, where a super majority is required for conviction and removal from office. To reach a super majority, all Democratic Party senators and 20 Republicans would need to agree to convict the president on impeachment charges—a highly improbable scenario in our view, but one we are watching carefully.

In the eurozone, October industrial production fell 0.5% m/m as anticipated. In the UK, October industrial and manufacturing production decreased less than expected at 1.3% y/y and 1.2% y/y respectively. October 2019 GDP was flat at 0.0% m/m, missing consensus. In Brexit news, Thursdays’ UK general election resulted in the Conservative Party winning a larger majority than expected—making an exit by January 31 all but certain. This should reduce uncertainty that has loomed over the UK economy and markets for more than two years—which we think is an overall positive for stocks—but may also reduce political gridlock which could dampen the positive effects of a Brexit resolution. For more, please see our 12/13/2019 MarketMinder article, “Another UK Election Surprise.”

In Japan, Q3 2019 GDP grew 1.7% y/y, beating forecasts. October retail sales fell 7.0% y/y and  industrial production fell 7.7% y/y, missing expectations. In China, November core consumer prices (excluding food and energy) grew 4.5% y/y. November exports fell 1.1% y/y and imports grew 0.3% y/y.

The Week Ahead:

US releases include December services and manufacturing Purchasing Managers’ Indexes (PMIs), Q3 2019 GDP and the Conference Board’s November US Leading Economic Index (LEI) reading. Eurozone releases include December services and manufacturing PMIs. In the UK, data reports include Q3 2019 GDP, December PMIs and November retail sales. The Bank of England announces its official bank rate. Japan announces November trade data, core consumer prices and the Bank of Japan’s policy rate. China announces November retail sales.

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.