Weekly Wrap-Up

Last Week In Markets: Dec 11 - Dec 15, 2017

Fisher Investments recaps the biggest market, political and economic news from last week, including US tax reform, global central bank decisions and various European and Asian economic data releases.

US economic data were generally positive. November core consumer prices (excluding food and energy) rose 1.7% y/y, slightly below estimates. November retail sales grew 0.8% m/m, handily beating expectations, and the October figures were revised up to 0.5% m/m from 0.2% m/m. November industrial production increased 0.2% m/m. As expected, the Fed raised its benchmark fed-funds target range by 25 basis points to 1.25% - 1.50% and increased its pace of balance sheet reduction. In politics, Senate and House Republicans reconciled their respective chambers’ tax reform bills into one and are scheduled to vote early next week. If Republicans can muster a simple majority approval in each chamber, the bill will then go to President Trump for his signature. As Ken wrote in his October 8, USA Today column, “When the tax talk and whack-or-jack adjustments are finished, the real drivers of this bull market come into clearer focus. Then stocks will likely keep charging higher, as they usually have after tax ‘reform.’ Be bullish about increased clarity, not possible tax cuts.”

European data were more robust. Eurozone December Markit manufacturing and services Flash Purchasing Managers’ Indexes (PMI) rose to 60.6 and 56.5, respectively—beating expectations and indicating continued growth. October industrial production grew 0.2% m/m, slightly ahead of forecasts. In the UK, data were broadly positive. November retail sales grew 1.1% m/m, beating estimates. November core consumer prices (excluding food and energy) rose 2.7% y/y, in line with expectations. The October unemployment rate remained at 4.3%. The European Central Bank and Bank of England kept their respective monetary policies unchanged.

In Asia, Chinese November industrial production increased 6.1% y/y and retail sales rose 10.2% y/y, each slightly below estimates. Japanese October industrial production grew 0.5% m/m.

The Week Ahead:

The US releases the third estimate of Q3 2017 GDP, November durable goods orders and the Leading Economic Index (LEI). The eurozone releases November inflation data. The UK posts the third estimate of Q3 2017 GDP. Japan reports November trade data and the Bank of Japan meets to set monetary policy.

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.