3 Things You Need to Know This Week | UK & EZ Q4 GDP, US Inflation, Legacy Planning

Transcript

Jessica Breiland:

Hello, and welcome to 3 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, Q4 2025 GDP.

Two GDP estimates land on Thursday. The UK will release its first estimate of Q4 2025 GDP and the eurozone will provide its second estimate for the same period. Forecasts for both regions point to modest, positive economic growth through the end of 2025. But what does this mean for you as an investor? Stock performance often hinges on the gap between investor expectations and reality. In the UK, overly pessimistic sentiment trails improving economic fundamentals such as rising purchasing managers' indexes. This gap could benefit equities. Yes, the UK economy has its challenges, but many large UK companies benefit from global revenue streams. This helps them perform well even when domestic challenges exist. The situation in the eurozone is similar, with initial GDP figures showing expansion in all major economies. There too, a majority of businesses continued expanding in January. While consumers remain pessimistic and like the UK, publicly-traded European companies tend to have globally diversified income streams. Investors may react negatively if these GDP reports miss expectations. But remember not to overanalyze these GDP figures, which look backward. They reflect what's already happened. Stocks look forward. They focus on future economic growth, rather than the previous quarter's performance. History shows that robust GDP growth isn't a requirement for strong market returns. Stocks simply need conditions to surpass expectations. Last year serves as a prime example. Global stocks delivered over 20% growth, despite sluggish GDP figures. European markets actually led the way, even though the US and China posted stronger GDP numbers. Always look beyond just the headline figure. Getting the context can help investors understand what's really driving performance.

Next, US inflation.

The latest US consumer inflation data comes out on Friday. This report offers some insight into the current state of the economy. After spiking in 2021 and 2022, The Consumer Price Index, or CPI, has bounced around in recent years. But it has remained at or below its long-term average of around 3% year over year since early 2024. We know that rising everyday expenses cause stress for many families. Everyone feels it at the grocery store or at the gas pump. Some inflation is normal in a growing economy, but recently, there's been a growing perception among consumers that rampant inflation is on the way, fueled by tariffs. But remember—inflation is a monetary phenomenon. Fundamentally, it stems from too much money chasing too few goods and services. This leads to price increases economy-wide. While tariffs might raise prices for some goods, they don't increase the overall money supply. Right now, money supply growth remains modest. We believe inflation is likely to stay milder than what many consumers currently expect.

Finally, planning a financial legacy.

For years, people have highlighted the coming "Great Wealth Transfer." This term refers to the shift of trillions of dollars from Baby Boomers to their beneficiaries. Baby Boomers, those born between 1946 and 1964, collectively own over $83 trillion in assets. That's over half of all US household wealth. Some worry that as Baby Boomers retire, they will spend less and slow the economy, while others wonder what will happen as that wealth eventually gets passed on to heirs. For those who will pass on assets, legacy planning is key. Legacy planning goes beyond traditional estate planning. It's not just about distributing assets. It's about securing your family's future, supporting the causes you care about, and ensuring your values endure. A strong legacy plan also prepares for the unexpected. Tools like financial and healthcare powers of attorney ease the burden on your loved ones if you become incapacitated. Perhaps the most critical element is communication. Openly share your intentions with your family. Explain what to expect, where to find important documents, and why you structured your plan the way you did. This conversation can prevent misunderstandings among your heirs.

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 fisherinvestments.com. Thanks for tuning in and don't forget to hit "like" and "subscribe"!