Weekly Wrap-Up

Last Week In Markets: June 24 - June 28, 2019

Fisher Investments recaps the biggest market, political and economic news from last week, including US GDP growth, eurozone inflation and Japanese retail sales.

Global markets rose 0.1% amid sparse economic releases and light geopolitical news. In the US, the third estimate of Q1 2019 GDP remained unrevised at 3.1% q/q. May new home sales fell 7.8% m/m, missing expectations for a modest increase. However, existing home sales—representing a larger share of the housing market—increased 1.5% m/m in May. We caution against reading too much into either figure. Home sales data can be volatile and subject to revision or large margin of error. Then too, despite what many people think, real estate alone is simply too small a component of GDP to be a big swing factor for the broad economy. May durable goods orders fell 1.3% m/m, driven primarily by contracting civilian aircraft orders, which are typically light ahead of biennial air shows scheduled for this summer. Excluding transportation, May durable goods orders rose 0.3% m/m. Even so, durable goods are a limited economic snapshot as they mostly reflect industrial activity—representing only a minor part of America’s predominantly services-based economy.

In the eurozone, preliminary May core consumer prices (excluding energy, food, alcohol and tobacco) rose 1.1% y/y. On the trade front, the European Union (EU) and Vietnam plan to sign a bilateral trade deal Sunday—adding to the list of EU trade agreements with various countries in recent years including Canada, Japan, Mexico and Singapore. While this news may not make big headlines, we believe it is a timely counterpoint to widespread trade war fears. Although tariffs have increased between the US and China, barriers to freer trade continue to fall across the world—a fact stocks likely appreciate, too. In the UK, the second estimate of Q1 2019 GDP was unrevised at 1.8% y/y.

In Japan, May data were mixed. Retail sales grew 1.2% y/y, in-line with expectations. Exports and imports fell -7.8% y/y and -1.5% y/y, respectively, as forecasted. Industrial production rose 2.3% m/m, but fell 1.8% y/y. World leaders met at the G-20 summit in Osaka, Japan starting on Friday. As of this writing, and largely as we expected, little of value has come out of the meeting other than talk and media fodder.

The Week Ahead:

The US, eurozone, UK, China and Japan release June manufacturing and services Purchasing Managers’ Indexes. The US announces June nonfarm payrolls and the unemployment rate. The eurozone reports May retail sales and the unemployment rate. Japan releases May household spending.

Tip of the Week:

US markets and Fisher Investments’ offices will be closed on Thursday, July 4 in observance of Independence Day. We will re-open for our normal operating hours on Friday, July 5.

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.