Last Week In Markets: July 25 - July 29 2022

In the US, preliminary June durable goods orders rose 1.9% m/m, handily beating estimates. June new home sales were well below expectations, declining 8.1% m/m—the lowest reading since April 2020. As widely anticipated, on Wednesday, the Federal Reserve announced a 75 basis point increase to the fed-funds rate, bringing the new target range to 2.25% – 2.5%. On Thursday, the first estimate of Q2 2022 GDP was -0.9% annualized, missing expectations for 0.5% growth. Following this second consecutive quarterly GDP decline, headlines and pundits hotly debated whether the US is in recession. While conventional wisdom holds that two consecutive quarterly GDP declines constitutes a recession, the National Bureau of Economic Research (NBER)—the official recession arbiter—doesn’t use that criteria. However, we believe that debate is largely backward-looking and provides little insight for investors. Months-old economic activity has little relevance for stocks, which we think have already digested the present mild economic contraction and are likely looking ahead to what the next 3 to 30 months have in store relative to expectations. For more, please see our 7/28/2022 commentary, “A Look at GDPs First-Half Dip and Beyond.”

In the eurozone, July flash core consumer prices (excluding food, energy, alcohol and tobacco) rose 4.0% y/y, slightly higher than the consensus forecast. The preliminary estimate of Q2 2022 GDP beat expectations at 0.7% q/q and 4.0% y/y. June money supply (M3) rose 5.7% y/y, slightly above expectations. In the UK, data were light. June money supply (M4) fell 0.3% m/m but rose 4.1% y/y.

In Japan, preliminary June industrial production increased 8.9% m/m but declined 3.1% y/y. Preliminary June retail sales fell 1.4% m/m and expanded 1.5% y/y—both below forecasts. June imports and exports grew 46.1% y/y and 19.3% y/y, respectively. The June unemployment rate was steady at 2.6%.

The Week Ahead

The US, UK, eurozone, Japan and China release final July purchasing managers’ indexes (PMIs). The US reports July nonfarm payroll figures, unemployment and June trade data. The eurozone releases June retail sales and unemployment data. The Bank of England meets to set monetary policy.

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.