Personal Wealth Management / Expert Commentary

Fisher Investments' "Three Things You Need to Know" Jan. 27th

Fisher Investments’ “3 Things You Need to Know This Week” is a weekly segment designed to help investors worldwide sift through the noise across financial media and understand what really matters for markets. This week’s topics include US politics, meetings from the Federal Reserve and European Central Bank, and an early look at economic growth in the US and Europe.

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Transcript

Tim Schulter:
Hello. Welcome to 3 Things You Need to Know This Week. Our regular series is designed to help you sift through the noise across financial media and understand what really matters for markets.

And now, here are three things you need to know this week.

First, US politics.

As a reminder, when it comes to politics, we're agnostic and solely focused on the potential market implications arising from political developments.

We've entered week two of the new Trump administration. After a headline filled first week, we're likely to see continued discussion about President Trump's executive actions, potential tariff strategy, cabinet nominees' Senate confirmation progress, and other legislative priorities in Congress.

While speculation isn't likely to simmer anytime soon and these developments are worth monitoring closely, we'd caution investors from making any knee jerk changes to their investment plans. We may see short-term volatility from political developments this year, but in our view, uncertainty should fade in the US and abroad, which should help stocks this year.

Next up, central bank meetings.

Two major central banks will announce monetary policy decisions this week. The US Federal Reserve meets on Wednesday, followed by the European Central Bank on Thursday. The Fed is expected to leave interest rates unchanged, while the ECB is expected to cut rates again.

Given the back-to-back meetings, some may worry different actions by these two central banks might send conflicting signals to the global economy. But markets have seen this before. Sometimes central banks move in tandem. Sometimes they don't. And markets have long demonstrated that they don't depend on coordinated central bank policy. Importantly, stocks don't depend on rate cuts alone to rise. Central bank policy is just one of many market drivers investors should consider.

Finally, fourth quarter GDP reports.

On Thursday, the US and eurozone released their first GDP estimates for the fourth quarter of 2024. Analyst forecasts suggest the US and eurozone enjoyed healthy economic growth to end the year. If the reports come in above or below expectations, we could see investor sentiment swing one way or the other. But we wouldn't read too much into initial market reactions.

GDP reports are backward-looking indicators telling us more about what stocks have already done, rather than what they might do next. Forward-looking stocks care more about future GDP growth, not what occurred in the preceding quarter.

And that's all 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 the "Insights" section of fisherinvestments.com. Tune in next week and don't forget to subscribe!

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