Global equities rose 0.4% in the final week of an overall positive quarter.
US economic data were mixed. The third estimate of Q2 2017 GDP was revised up to 3.1% annualized. August new home sales and building permits were 560,000 and 1,272,000, respectively—still growing but missing expectations. On the political front, the White House and congressional Republicans revealed a proposed outline for tax reform. Whether the proposed changes appeal to you or not, we suggest taking a healthy, skeptical approach. Initial proposals can be altered significantly during the legislative process. As for market impact, there is a long history of tax changes having no set outcome, good or bad, as they often are implemented too slowly to have a substantial effect. (For more on tax reform, please read Ken’s USA Today article, Tax reform’s secret sauce for boosting economic growth and our MarketMinder.com article, Time to Talk About Tax Reform.)
Germany held federal elections and sitting Chancellor Angela Merkel’s center-right Christian Democratic Union (CDU) received the largest share of the vote. The CDU must now form a coalition with other parties and thereafter a government. The media largely focused on the populist Alternative for Germany (AfD) party gaining seats in parliament for the first time. However, in our view, little has changed in German politics—Germany probably gets more political gridlock, keeping legislative risk low and extending Europe’s year of falling uncertainty. (For more on the results of the German election, please read our MarketMinder.com article, Merkel’s Murky Win.)
Elsewhere, UK economic data were largely positive. Q2 2017 GDP increased 0.3% annualized, as expected. Exports rose 1.7% q/q, while imports slowed to 0.2% q/q. Business investment and household expenditure rose 0.5% q/q and 0.2% q/q, respectively. In the eurozone, August money supply (M3) increased 5.0% y/y, ahead of forecasts.
In Japan, August core-core CPI (excluding food and energy) was flat y/y and missed estimates. The August unemployment rate remained at 2.8%. August exports and imports remained at 18.1% y/y and 15.2% y/y, respectively. Japanese Prime Minister Shinzo Abe called for a general election to be held in October, one year earlier than scheduled.
The US reports durable goods orders, employment and trade data. The eurozone reports employment data and retail sales. The US, UK and eurozone release manufacturing and services Purchasing Managers’ Indexes (PMIs). Japan releases auto sales and services PMI.
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.