Weekly Wrap-Up

Last Week In Markets: July 10 - 14, 2017

Fisher Investments recaps the biggest market, political and economic news from last week, including US and eurozone employment results, as well as manufacturing and non-manufacturing data.

US economic data were mixed. May wholesale inventories beat expectations, rising 0.4% m/m, while June retail sales missed expectations, falling 0.2% m/m. June industrial and manufacturing production rose—0.4% m/m and 0.2% m/m, respectively. Core inflation met expectations of 1.7% y/y growth. Fed Chair Janet Yellen’s congressional testimony sparked speculation on the pace of future rate hikes, but we don’t believe it offered anything actionable for investors—watch what policymakers do, not what they say. On the political front, Republicans postponed the Senate’s August recess in an effort to make progress on health care reform and other legislative items.

The Bank of Canada hiked its overnight lending rate by 0.25%—the first hike in seven years—citing a higher forecast for economic growth.

European economic data showed further expansion. The eurozone’s May industrial production grew 4% y/y—the fastest increase since August 2011. In the UK, the unemployment rate fell to 4.5% in the 3 months to May 2017. In France, June inflation met expectations at 0.7% y/y.

In Asia, May Japanese retail sales missed expectations, growing 2.1% y/y. May industrial production fell 3.6% m/m due to lower car and equipment production—the worst decline since 2011. In China, June credit data surprised positively, with new loans growing 12.9% y/y. While this is the second consecutive month of credit data beating forecasts, longer term credit growth continues to decelerate as the government attempts to control growth ahead of the country’s National Congress later this year. Meanwhile, money supply grew 9.4% y/y, exports increased by 11.3% y/y and imports expanded 17.2% y/y.

In Brazil, former President Luiz Inácio Lula da Silva was convicted of bribery and money laundering in connection with the Car Wash scandal that has now ensnared the country’s past three presidents. While the news is headline grabbing, this is a small piece of a long-running corruption case that has dominated Brazilian politics. Lula is out of jail presently, pending appeal.

Week Ahead:

The US reports trade data and housing starts. The European Central Bank and Bank of Japan meet and will release their respective monetary policy decisions. The eurozone releases inflation figures and the UK announces June retail sales numbers.

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.