Weekly Wrap-Up

Last Week In Markets: Jan 13 - Jan 17, 2020

Fisher Investments recaps the biggest market, political and economic news from last week, including a US-China trade deal update, UK trade data and Chinese Q4 GDP numbers.

Global equities rose as headlines focused on the US-China trade deal and Senate impeachment trial proceedings. In the US, December retail sales rose 0.3% m/m, in line with estimates. December industrial production fell 0.3% m/m, slightly more than expected. Core consumer prices (excluding food and energy) rose 0.1% m/m in December, less than forecast. On Wednesday, the US and China signed a phase-one trade deal as expected. As part of the deal, the US agreed to reduce some existing tariffs and cancel planned tariffs while China promised to increase purchases of American goods and services and implement a series of market reforms. While the official agreement is a milestone in US-China trade negotiations, we caution investors against overreacting to trade negotiation developments. Given the total impact of tariffs is smaller than many investors originally feared, we believe this economic expansion and bull market can continue regardless of how US-China trade talks progress from here. On Thursday, the Senate began President Trump’s impeachment trial. For commentary on impeachment, please see our 12/18/2019 article, “A Refresher on Impeachment and Stock Markets.”

In the UK, December retail sales fell 0.6% m/m but rose 0.9% y/y. December core consumer prices (excluding food, energy, alcohol and tobacco) increased 1.4% y/y, below estimates. November industrial production fell 1.2% m/m and 1.6% y/y—both more than expected. November exports rose 1.1% m/m while imports dropped 7.8% m/m. We believe this decline in November imports was likely tied to businesses and consumers front-loading purchases from Europe ahead the then October 31 Brexit deadline. In the eurozone, December core consumer prices (excluding food, energy, alcohol and tobacco) rose 1.3% y/y, in line with forecasts. November industrial production modestly increased 0.2% m/m but fell 1.5% y/y. November exports and imports fell 2.9% y/y and 4.6% y/y, respectively.

In China, December retail sales increased 8.0% y/y, surpassing estimates. Q4 2019 GDP growth came in at 6.0% y/y, as expected. December trade figures exceeded expectations—exports rose 7.6% y/y and imports rose 16.3% y/y. In Japan, December bank lending increased 1.8% y/y.

Week Ahead:

The US, UK and eurozone release preliminary January manufacturing and services Purchasing Managers’ Indexes (PMI). The US also reports the December Leading Economic Index (LEI). The eurozone also posts Q3 2019 trade data. Japan announces December inflation, LEI and trade numbers as well as November industrial production data. The European Central Bank and Bank of Japan meet to set their respective monetary policies.

Tip of the Week:

Fisher Investments’ offices will be closed on Monday, January 20 in observance of Martin Luther King Jr. Day.

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.