This Week in Review | Presidential Appointments, OPEC+, AI & Tech Stocks

Transcript

Jessica Breiland:

Hello, and welcome to This Week in Review. This weekly segment is designed to highlight a few important developments you may have missed this week, what they may mean for markets and most importantly, the potential impact for investors. To stay up to date with our latest market insights, subscribe to our YouTube channel or visit FisherInvestments.com. Now, let's review what happened this week.

First, presidential appointments.

There's been plenty of speculation this week surrounding who President Trump may choose to replace Federal Reserve Chair Jerome Powell next year. Meanwhile, on Thursday, the president nominated his economic advisor, Stephen Miran, to fill an immediate vacancy on the Federal Reserve Board of Governors. Additionally, Trump is expected to appoint a new head of the Bureau of Labor Statistics, or BLS, after dismissing the previous agency head last week. These decisions have sparked some concern about the potential impact of President Trump's appointments on both the Federal Reserve and the BLS. However, it's essential to understand that the Federal Open Market Committee makes fed policy decisions, with the fed chair being just one of 12 voting members. This structure limits the influence of any single individual.

As for the BLS, opinions vary. Some anticipate the president's appointment could correct perceived political bias, while others worry it may introduce new political influence. A third, more neutral perspective attributes large data revisions to declining survey response rates, and new leadership won't change this trend. Regardless of these differing views, there's an important takeaway here: The BLS is not the only employment data source available. For instance, payroll processor ADP publishes its own jobs report, and recently, BLS revisions largely align with prior ADP data. This serves as a vital reminder for investors. Relying on one source or reading for economic data is an error. No single data set is foolproof, and all economic indicators are backward looking, reflecting conditions that stocks have already lived through and priced in.

Next, an oil production announcement from OPEC+.

On Sunday, the organization for Petroleum Exporting Countries and its allies, widely known as OPEC+, announced another large oil production increase set to begin this September. This latest move fully reverses the group's sharp production cuts from 2022 and 2023. Since April, OPEC has been raising production targets, citing strong market fundamentals. Notably, Brent crude oil prices, which are the benchmark for international oil prices, hit a low of $58 per barrel in April due to rising recession concerns, but have rebounded closer to $70 per barrel even as OPEC increases supply. However, we believe these production target increases are unlikely to have a material, long lasting impact on the overall oil supply. Declining US oil rig counts and slowing production growth are likely offsetting OPEC production increases.

To us, OPEC's influence on global oil prices appears overstated. Why? Because non-OPEC member producers, especially in the US, operate independently from the group's targets, which reduces OPEC's control over prices. Plus, many OPEC members struggle to meet their own production quotas, so announcements themselves don't always translate to elevated supply. Overall, global oil production trends suggest a well supplied and fairly balanced market. While factors like regional conflicts, tariffs and OPEC policies may contribute to temporary price volatility, we expect oil prices to remain largely rangebound in the near-term.

Finally, AI and Tech stocks.

Various Tech stocks, particularly those tied to artificial intelligence, or AI, have hit record highs recently, fueled by robust earnings reports this year. Unsurprisingly, many investors continue to be optimistic and excited about AI's potential. We agree that AI and Tech related stocks are likely continue to perform fine, but we'd caution investors against over concentrating in these categories or making investment decisions solely based on headline driven narratives. Believing AI stocks will continue to excel is a sentiment shared by many investors, but surprises tend to move markets most, and successful investing often hinges on knowing something others don't. For AI and Tech stocks, lofty expectations could set a challenging standard for reality to exceed. On the other hand, we see greater potential for outperformance from non-US value stocks, where the gap between expectations and reality appears wider versus big US Tech stocks. We think this creates more room for non-US value stocks to positively surprise, with reality exceeding lower expectations.

This was evident in the first half of 2025 as more economically sensitive value stocks, particularly outside the US, outperformed big US Tech stocks. We believe this trend likely continues, supported by favorable fundamentals benefiting non-US value companies, along with the continued lack of widespread focus on these less hyped opportunities.

That's it for this week.

Thanks for tuning in to This Week in Review. If you're looking for more insights, then don't miss our other series, 3 Things You Need to Know This Week, released every Monday. You can also visit FisherInvestments.com anytime for our latest thoughts on markets. Thanks again for joining us, and don't forget to hit 'like' and 'subscribe!'