Weekly Wrap-Up

Last Week In Markets: Feb 19 - Feb 23, 2018

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

Stocks ended slightly higher amid light economic news.

In the US, economic data were positive. The Conference Board’s Leading Economic Index (LEI) expanded 1.0% m/m in January, ahead of the 0.7% m/m consensus forecast. A high and rising LEI trend—as present today—has never preceded a recession in the last 50 years. The February Markit Flash Purchasing Managers’ Indexes (PMIs) indicated expansion in services and manufacturing, both rising above expectations. With earnings season winding down, more than 74% of companies have beat earnings targets and 78% beat revenue estimates. The latter is the highest since tracking the figure began in 2008. We will report final data once all companies have reported. (For more on corporate earnings, see our 2/23/2018 MarketMinder article, “Corporate America Made Some Money in Q4.”) The Fed released its January meeting minutes and many in the media dissected it for clues on future rate decisions. In our view, trying to forecast central bank decisions is a fool’s errand.

In the eurozone, the February Markit manufacturing and services Flash PMIs came in at 58.5 and 59.6, both lower than January’s readings but well above 50—still indicating expansion. January core consumer prices (excluding energy, food, alcohol and tobacco) rose 1.0% y/y, matching estimates. German Q4 2017 GDP grew 0.6% q/q, meeting expectations. In the UK, the second estimate of Q4 2017 GDP was revised lower to 0.4% q/q—largely due to a major pipeline closure, which depressed oil and gas output. In our view the revised GDP data still show the UK economy growing faster in 2017’s second half. What’s more, leading indicators like the yield curve spread and purchasing manager new orders suggest continued growth ahead.

January Japanese trade data were mixed: Export values increased 12.2% y/y and import values rose 7.9% y/y, beating and missing estimates, respectively. The February Nikkei manufacturing Flash PMI fell slightly to 54.0 from January’s 54.8—lower than expected. January core-core consumer prices (excluding fresh food and energy) rose 0.4% y/y, faster than expected.

The Week Ahead:

The US releases January durable goods orders. The UK reports February Markit/CIPS manufacturing PMI. The eurozone posts January unemployment. Japan reports January retail sales and industrial production. China releases manufacturing and non-manufacturing 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.