Weekly Wrap-Up

Last Week In Markets: Sept 18 - Sept 22, 2017

Fisher Investments recaps the biggest market, political and economic news from last week, including US monetary policy updates and geopolitical activity.

Global stocks rose amid US central bank activity and escalating rhetoric between the US and North Korea.

US economic data were mixed. The August Leading Economic Index increased 0.4% m/m, beating the consensus. August housing starts fell 0.8% m/m, disappointing expectations for an increase. The Fed voted to maintain the federal funds target range at 1.00-1.25% and confirmed it will begin reducing its balance sheet in October by letting a very small portion of its bond holdings mature every month without reinvesting the proceeds. (For more on the Fed’s announcement, please read our MarketMinder.com article, The Fed’s Slimdown Is No SlimFast.) In geopolitics, President Trump and Kim Jong Un continued to exchange barbs and threats over North Korea’s missile tests and nuclear program. We continue to monitor the situation closely.

In Europe, economic data were largely positive. August UK retail sales grew 2.4% y/y, significantly ahead of estimates. Prime Minister Theresa May suggested a 2-year implementation period for Brexit after the UK’s planned withdrawal in 2019, consistent with our view that a long, slow transition should provide markets ample time to digest changes. The August eurozone Consumer Price Index rose 1.5% y/y, as expected. French Q2 2017 GDP grew 1.8% y/y—beating the consensus.

In Asia, Japan’s August trade values increased more than expected, with exports increasing 18.1% y/y and imports increasing 15.2% y/y. The Bank of Japan announced it will leave its monetary policy unchanged. Standard & Poor's, a credit ratings agency, cut China’s sovereign debt rating from AA- to A+, citing increased “economic and financial risks.” However, we don’t believe the move is likely to have much market impact. Ratings agencies are often late to the game and markets have long since priced in China’s risks.

The Week Ahead:

The third quarter comes to a close as the US releases the third estimate of Q2 2017 GDP, August durable goods orders and new home sales. The eurozone releases August money supply and September inflation figures, while the UK releases its final estimate of Q2 2017 GDP. Germany holds federal elections on Sunday to elect members of the 19th Bundestag, which in turn elects a new Chancellor. It’s widely expected Angela Merkel will retain power. Japan releases August unemployment and inflation. China reports September manufacturing and services Purchasing Managers’ Indexes.

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 a Luxembourg tax basis. Past performance is no guarantee of future results. A risk of loss is involved with investments in stock markets.