Weekly Wrap-Up

Last Week In Markets: Nov 23 - Nov 27 2020

Fisher Investments recaps the biggest market, political and economic news from last week, including US Q3 GDP, US, eurozone and UK Purchasing Managers’ Indexes (PMIs) and Japan’s October imports and exports.

Global equities rose in a US holiday-shortened trading week. In the US, the second estimate of Q3 2020 GDP re-affirmed a 33.1% annualized growth rate. November Markit Flash Manufacturing and Services Purchasing Managers’ Indexes (PMIs) rose to 56.7 and 57.7, respectively—both higher than forecasted (readings over 50 indicate expansion). October durable goods orders rose 1.3% m/m, beating expectations. With over 95% of US companies reporting so far, Q3 2020 earnings are on track to decline far less than originally anticipated with 84% of firms positively surprising—which would mark a second consecutive quarter at this record level. While reported earnings are backwards looking, Q3 results show a massive gap between reality and expectations persists and should continue providing a positive tailwind for stocks in our view. For more, please see our 11/19/2020 article, “Earnings Reality is Beating Expectations—by a Lot.

In the eurozone, the November Markit Flash Manufacturing PMI fell to 53.6, beating estimates, while the November Markit Flash Services PMI fell to 41.3, missing estimates. October money supply (M3) rose 10.5% y/y. In the UK, the November Markit/CIPS Flash Manufacturing PMI rose to 55.2 while the November Markit/CIPS Flash Services PMI fell to 45.8, both better than expected. For the eurozone and the UK, these preliminary PMI readings offer a first look at how new partial lockdowns are affecting economic activity and may provide a preview for what the US might expect next month as restrictions tighten. Further, the readings suggest a less severe economic impact from renewed shutdowns compared to earlier in the year as countries take a more nuanced lockdown approach and businesses and households have learned to adapt better. In our view, markets remain near new highs because they are looking far past these near-term disruptions to the recovery that will likely follow as we head into 2021. For more commentary on recent PMIs, please see our 11/23/2020 commentary, “Lighter Lockdowns, Lighter Economic Impact (at Least for Now).”

In Asia, data were light. Japan’s October imports and exports fell 13.3% and 0.2% y/y, respectively.

The Week Ahead

The US, UK, eurozone, Japan and China report final manufacturing and services PMIs for November. The US, eurozone and Japan release unemployment data. Japan also reports October industrial production while the eurozone and Japan release October retail sales.

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.