Fisher Investments on This Week’s Fed Meeting, Q4 Eurozone GDP and Tax Season Tips

Transcript

Jessica Smith

Hello and welcome to Three Things You Need to Know this Week. Our regular series designed to help you sift through the noise across financial media and understand what really matters for markets. To stay up to date with our latest market insights, subscribe to our YouTube channel or visit FisherInvestments.com. And with that, here are three things you need to know this week.

First, the Fed's latest meeting.

On Wednesday, the US Federal Reserve will hold its first monetary policy meeting of the year. During the meeting, members will decide whether to cut the Federal Funds rate, currently set at 3.5 to 3.75%. The Fed is not expected to announce a cut at this week's meeting, but investors will be watching closely to gain insights into the potential direction of monetary policy in 2026. While Fed decisions often dominate headlines, we want to remind investors that monetary policy is just one of many factors influencing markets. Rate cuts may grab attention, but they aren't make or break for stocks. Also in the news, last week, the Supreme Court heard opening arguments in a case challenging the power of President Trump to fire Fed Governor Lisa Cook. It's unknown when the court will rule, but the result will likely add to the ongoing debate over Fed independence. We think though, the fear around Fed independence is misplaced. The Fed has never been completely free from politics. Even the appearance of being concerned about independence, is political. We'll continue to monitor these developments, but we see monetary policy as just one of many factors influencing markets. And though this latest development has garnered plenty of headlines, we don't believe it's likely to materially disrupt markets over the next 12 to 18 months.

Next, the eurozone's Q4 GDP report.

Preliminary fourth quarter GDP data for the eurozone will be released on Friday and is expected to be in line with the modest growth seen in Q3. Notably, the US fourth quarter GDP reading, which was also originally scheduled for this week, has been rescheduled to February 20th because of the continued delays caused by the recent government shutdown. Continued slow economic growth may worry some who assume that robust GDP growth is necessary for strong stock returns. It's important to remember, though, that stocks don't need strong GDP growth to rise. They just need conditions to turn out better than expected. Last year was a great example of how resilient stocks can be. Stocks saw greater than 20% growth despite slow GDP growth and pockets of global weakness. And European stocks led last year, despite the US and China having stronger GDP growth. Regardless of whether a headline GDP reading is good or bad, it's always essential to look beyond the surface. Digging into the underlying components provides a clearer picture of how the private sector is performing, which is what stocks care most about.

Finally, things to consider ahead of tax season.

While taxes aren't due until April 15th, it's usually best to get a head start. Keep an eye out for tax forms from employers and related to your investment accounts. W-2s and 1099s must be sent out by February 2nd this year, since January 31st falls on a weekend, although they may take a few days to reach you if they are sent in the mail. If 2025 was the first year in which you had to take a required minimum distribution or RMD, then you must take your distribution before April 1st, 2026, after your first year. All future RMDs must be taken before December 31st of the same year to avoid penalties. Consulting a tax professional is always a wise choice, especially under a few circumstances. If you're a business owner, if you have a complex mix of assets, or if you have a taxable investment account like a brokerage account, and don't delay as many tax advisors have their own deadlines for how late clients can send in paperwork and still get their returns filed on time.

And that's it for this episode of 3 Things You Need to Know this Week.

For more of our thoughts on markets, check out This Week in Review, released every Friday. You can also visit Fisher Investments.com. Thanks for tuning in and don't forget to hit "Like" and "Subscribe!"