Global stocks rose amid mixed economic data. Portfolios underperformed as our underweights to the US and Financials detracted from relative returns. December US economic data were light as the government shutdown extended into a fourth week. Industrial production rose 0.4% m/m, beating expectations. Manufacturing production beat the consensus—rising 1.1% m/m. The Producer Price Index rose 2.5% y/y, matching expectations.
In the eurozone, December core inflation (excluding food and energy) rose 1.0% y/y, as expected and in line with the prior reading. December industrial production fell 1.7% m/m, more than expected. November exports rose 1.9% y/y and imports rose 4.7% y/y. In the UK, headlines focused on Brexit developments. Early in the week, members of Parliament voted to reject Theresa May’s Brexit deal with the European Union, as expected. Then, the opposition Labour Party leader Jeremy Corbyn called for a no-confidence vote on May's government. May’s government survived with 325 in favor of the government to 306 against. May now has until January 21 to present a “Plan B” for Brexit to Parliament. While the majority of Parliament agrees the UK should avoid a no-deal scenario, they continue to disagree on what the eventual agreement should look like. For more on Brexit, see our 01/16/2019 commentary, “A Noisy Two Days in London Leaves the Status Quo.” In UK economic news, December core inflation (excluding food and energy) rose 1.9% y/y, slightly greater than the consensus. December retail sales beat expectations, falling 0.9% m/m.
In China, December exports and imports fell by 4.4% y/y and 7.6% y/y, respectively, both missing expectations. December lending increased 13.5% y/y, beating forecasts. In Japan, December core-core inflation (excluding fresh food and energy) rose 0.1% y/y, in line with expectations. November industrial production grew by 1.5% y/y—more than anticipated. November retail sales fell 1.1% m/m, in line with the prior month.
The US releases the December Leading Economic Index (LEI) and January Markit manufacturing and services Purchasing Managers’ Index (PMI) data. The UK announces November employment figures, while the eurozone reports January Markit manufacturing and services PMI numbers. China releases December retail sales and Japan reports December trade data, January inflation and manufacturing PMI numbers. The European Central Bank and Bank of Japan meet to set their respective monetary policies.
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 a Luxembourg tax basis. Past performance is no guarantee of future results. A risk of loss is involved with investments in stock markets.