Fisher Investments recaps the biggest market, political and economic news from last week, including US legislative developments, US LEI data and eurozone, UK and Japan inflation readings.
In the US, the Conference Board’s October Leading Economic Index (LEI) increased 0.9% m/m—higher than consensus estimates. October retail sales rose 1.7% m/m, beating expectations. October manufacturing and industrial production expanded 1.3% m/m and 1.6% m/m, respectively—both more than double what analysts forecasted. While manufacturing and industrial production data are mostly backward-looking for stocks, the report showed oil and gas well drilling has largely recovered since July 2020’s low. Motor vehicle and semiconductor production is also rising—suggesting producers are finding ways to better navigate global supply chain issues. For more, please see our 11/16/2021 commentary, “Fun Facts From October’s Industrial Production Report.” On Monday, President Biden signed the Infrastructure Investment and Jobs Act into law. On Friday, the US House of Representatives voted to pass the currently $1.75 trillion Build Back Better Act, which now moves to the Senate where moderate Democrats Kyrsten Sinema (AZ) and Joe Manchin (WV) have already voiced objections to some provisions. The negotiating process from here will be painstaking, likely leading to an even more watered-down bill—if it passes the Senate at all. Either way, this bill is unlikely to be make-or-break for markets, in our view.
In the eurozone, October core consumer prices (excluding energy, food, alcohol and tobacco) rose 2.0% y/y, slightly less than expected. The second estimate of Q3 2021 GDP was unchanged at 2.2% q/q and 3.7% y/y. In the UK, October core consumer prices (excluding food and energy) rose 3.4% y/y, higher than expected. October retail sales fell 1.3% y/y but rose 0.8% m/m. Unemployment in the three months ending in September fell to 4.3%.
In Japan, the first estimate of Q3 2021 GDP showed a contraction of 0.8% q/q, but growth of 1.4% y/y—both missing expectations. October core-core consumer prices (excluding food and energy) fell 0.7% y/y. October imports and exports rose 26.7% y/y and 9.4% y/y, respectively—both lower than expected. Final September industrial production remained unchanged from the initial -5.4% m/m estimate. September retail sales fell 0.5% y/y. In China, October retail sales and industrial production rose 4.9% y/y and 3.5% y/y, respectively, both beating expectations. The October unemployment rate held steady at 4.9%.
The Week Ahead:
The US, UK, eurozone and Japan release November purchasing managers’ indexes (PMIs). The US reports its second estimate of Q3 2021 GDP, October new home sales and durable goods orders. Japan releases September LEI data and October trade figures.
Tip of the Week:
Fisher Investments’ offices and US markets will be closed on Thursday, November 25 in observance of Thanksgiving. Our offices will reopen Friday, November 26.