Fisher Investments recaps the biggest market, political and economic news from last week, including the final US readings for May’s Markit Manufacturing and Services Purchasing Managers’ Indexes (PMIs), UK April money supply growth, and Japan's preliminary April industrial production numbers.
In the US, the final reading for May’s Markit Manufacturing and Services Purchasing Managers’ Indexes (PMIs) readings came in at 62.1 and 70.4, respectively, with both figures modestly beating analyst forecasts. (Readings over 50 indicate expansion) While these readings and others globally grabbed headlines, we caution investors from dwelling on them. PMIs are still backward-looking and mostly confirm what was already expected—an initial boost tied to economic re-openings. We think markets are looking far beyond what these data show and suggest investors do the same. For more, please see our 6/4/2021 commentary, “The Record-Setting May Economic Data That Should Bore You.” Unemployment rate fell to 5.8%, slightly lower than estimates. May nonfarm payrolls grew by 559,000, missing estimates but increasing from April’s 278,000.
In the UK, data were light. The final May CIPS Manufacturing and Services PMI figures were 65.6 and 62.9, respectively. April money supply (M4) increased 9.1% y/y and 0.1% m/m. In the eurozone, the final May Markit Manufacturing and Services PMI readings improved to 63.1 and 55.2, respectively—both beating expectations. April retail sales grew 23.9% y/y (in part due to April 2020’s low base) and fell 3.1% m/m. April unemployment fell slightly to 8.0%. April money supply (M3) grew 9.2% y/y—slightly missing expectations. May core consumer prices (excluding energy, food, alcohol and tobacco) rose 0.9% y/y.
In Japan, the final readings of May’s Jibun Bank Manufacturing and Services PMIs came in at 53.0 and 46.5, respectively. Preliminary April industrial production rose 15.4% y/y and 2.5% m/m. Preliminary April retail sales grew 12.0% y/y though fell 4.5% m/m. In China, May Caixin Manufacturing and Services PMIs came in at 52.0 and 55.1.
The Week Ahead:
The US and China report May consumer prices. The US also announces April trade data. The UK releases April industrial and manufacturing production figures. The eurozone posts its third estimate of Q1 2021 GDP readings, and the European Central Bank (ECB) meets to set interest rates. China reports May trade data and money supply (M2) figures. Japan announces its second estimate of Q1 2021 GDP and preliminary May money supply (M2) readings.
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. Any commentary regarding strategy or performance reflects our Global Total Return strategy benchmarked to the MSCI World Index. Some clients may have different benchmarks reflecting different objectives and circumstances, including permanent allocations to cash or fixed income. Please note that accounts may not contain all elements of the strategy discussed here.
Additionally, individual client customizations and start dates may preclude certain elements of this strategy from being implemented. 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. The S&P 500 Composite Index is a capitalization-weighted, unmanaged index that measures 500 widely held US common stocks of leading companies in leading industries, representative of the broad US equity market. The MSCI Europe, Australasia and Far East (EAFE) Index is an unmanaged, capitalization-weighted stock index measuring the performance of selected stocks in 21 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. The MSCI World Small Cap Index is an unmanaged, capitalization-weighted stock index measuring the performance of investable securities with a market capitalization below that of the companies in the MSCI Standard Indexes, targeting approximately 14% of free-float adjusted market capitalization in 23 developed countries. It is presented here net of dividend withholding taxes and uses the maximum rate applicable to non-resident institutional investors who do not benefit from double taxation treaties.
Sources: Eagle PACE, FactSet, Bloomberg. Fisher Global Total Return results are preliminary and unaudited. They approximate our Private Client Group’s 100% global equity composite for the week ending 6/4/2021. Returns are calculated using representative portfolio performance. This representative portfolio information is derived from actual client portfolio returns net of fees. Fees are approximated by applying a 1% annual fee rate weekly. Individual account returns will vary. Specifically, other clients’ portfolio performance may differ given the various investment restrictions, cash requirements and other circumstances that can apply to particular clients. You can request returns for your specific account from your Investment Counselor.