Fisher Investments recaps the biggest market, political and economic news from last week, including US and UK Q3 2020 GDP figures, US November durable goods orders and Japanese October Leading Economic Index (LEI) reading.
Global equities fell in a holiday-shortened week. In the US, the third estimate of Q3 2020 GDP growth was revised slightly upward to 33.4% annualized (or -2.8% y/y). November durable goods orders rose 0.9% m/m, higher than expected. In politics, Congress agreed on a $900 billion COVID relief package, which President Trump then asked they amend to include higher direct payments to Americans. Though it remains unclear if the bill will be revised further, it seems unlikely to us it suddenly implodes since it passed both chambers with veto-proof majorities. While the bill should help some struggling households and businesses, we don’t believe it will meaningfully boost the economic recovery even if a few more billion dollars are added to it as the president requested. For more, please see our 12/23/2020 commentary, “An Early Christmas Gift From Congress?”
In the UK, the second estimate of Q3 2020 GDP growth was revised upward to -8.6% y/y and 16.0% q/q. Q3 exports fell 0.4% q/q, while imports rose 11.7% q/q. On Thursday, the UK and European Union agreed to a post-Brexit trade deal. While we have long written that a deal isn’t necessary for both sides’ economies (or stock markets) to do fine once the post-Brexit transition period ends, the deal should provide businesses clarity and help boost sentiment. For more, please see our 12/24/2020 commentary, “Today in Brexit, Day 1,644.”
In Japan, data were light. The Conference Board’s October Leading Economic Index (LEI) was revised higher to 94.3 from initial estimates of 93.8, resulting in an increase of 1.1% m/m.
The Week Ahead
Data are light in another holiday-shortened week. Japan releases November retail sales, industrial production and trade data. China releases December manufacturing and non-manufacturing Purchasing Managers’ Indexes (PMIs).
Tip of the Week
Fisher Investments’ offices and US markets will be closed on Friday, December 25 in observance of Christmas Day and Friday, January 1 for New Year’s Day. We wish you and your families a safe and enjoyable holiday season!
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.