Global equities ended a quiet week 0.2% higher.
US economic data were mixed. The November Leading Economic Index (LEI) was unchanged as expected, with gains from a steepening yield curve mitigated by slower building permits. Volatile Durable Goods Orders fell 4.6% m/m in November—less than the expected 4.8% decline—as new nondefense capital goods orders offset transportation weakness. November personal spending expanded 0.2% y/y, slightly missing estimates. Despite consensus expectations for a 1.8% m/m drop, existing home sales rose 0.7% to the highest level in over nine years. Similarly, new home sales increased 5.2% m/m to 592,000, handily beating the 2.1% forecast. The weekly number of people filing new jobless claims increased to 275,000—slightly above projections—though the trend remains positive and near historic lows. The final third-quarter GDP revision was 3.5% annualized—better-than-expected and driven by firmer consumer spending and business investment.
Underappreciated expansions in the UK and eurozone remained intact. UK Q3 GDP was revised higher to 2.2% y/y as resilient consumer spending and broad economic growth continued to defy Brexit concerns. Germany’s November producer prices rose 0.1% y/y, beating the expected 0.2% decline, as higher energy prices drove the first increase in more than three years. France’s November producer prices rose 0.8% m/m, while November consumer spending of 3.3% y/y handily beat estimates. Elsewhere, Italy is moving forward with bank bailout plans aimed primarily at its oldest and most troubled lender, Monte dei Paschi, mitigating concerns government support would fade after former Prime Minister Renzi’s resignation.
Japanese November trade data were positive. Export volumes rose sharply to 7.4% y/y, bolstered by a weaker yen and accelerating demand for autos and auto parts in China, Europe and the US. The Bank of Japan left its annual asset purchase targets and yield curve control policy unchanged, but upgraded its economic assessment for the first time in 18 months on improved industrial production and exports.
US economic releases are light in the upcoming holiday week. November pending home sales, wholesale and retail inventories and Case-Shiller housing prices are released. The UK posts December house prices. Japan reports November industrial output, retail sales and inflation while China releases its December manufacturing and non-manufacturing purchasing manager indexes (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.