Weekly Wrap-Up

Last Week In Markets: Feb 12 - Feb 16, 2018

Fisher Investments recaps the biggest market, political and economic news from last week, including US inflation data, eurozone GDP and trade figures and Japanese GDP.

Global stocks ended the week 4.2% higher amid continued market volatility. While market volatility is uncomfortable, corrections are normal and healthy during bull markets. As Ken wrote in his most recent Financial Times column: “Bull markets do not end this way.”

In the US, economic data were mixed. After four straight positive months, industrial production fell 0.1% m/m in January. However, on a year-over-year basis, industrial production increased 3.7%. January retail sales fell 0.3% m/m but rose 3.6% y/y—missing expectations. January core consumer prices (excluding food and energy) rose 1.8% y/y, higher than forecasted. Many headlines focused on inflation as the recent selloff’s cause. While investors often latch onto a seemingly plausible story to try and explain market volatility, corrections strike for any—and often no—good reason. In our view, rapidly rising inflation isn’t likely in the near term. For more, see the 02/07/2018 MarketMinder commentary, “What Everyone Is Missing About Inflation This Week.”

European data were light but mostly positive. In the eurozone, the second estimate of Q4 2017 GDP confirmed 2.7% y/y growth—the 19th consecutive quarter of growth. December industrial production increased 5.2% y/y, beating estimates. December imports and exports rose 2.5% y/y and 1.0% y/y, respectively. In the UK, January retail sales rose 1.6% y/y—below forecasts. January core consumer prices (excluding energy, food, alcoholic beverages and tobacco) rose 2.7% y/y, slightly ahead of expectations.

In Japan, the first estimate of Q4 2017 GDP was reported at 0.5% annualized—missing expectations but marking the eighth consecutive quarter of growth. On Wednesday, South African President Jacob Zuma resigned after increased pressure to step down. The National Assembly voted on Thursday to elect Cyril Ramaphosa as the new president.

The Week Ahead:

Data reports are light in the US holiday-shortened week. The UK posts December unemployment and the second estimate of Q4 2017 GDP. The US and eurozone report February manufacturing and services Flash Purchasing Managers’ Indexes. The eurozone and Japan release January inflation data.

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.