3 Things You Need to Know This Week | US Q3 GDP, French Budget, Santa Claus Rally

Transcript

Ben Thistlewaite:

Hello, and welcome to 3 Things You Need to Know this Week. This is our regular series that's designed to help you sift through the noise in 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 the three things you need to know this week.

First, preliminary US third quarter 2025 GDP estimates.

The Bureau of Economic Analysis is set to release its first estimate for US third quarter GDP, a report that was delayed from October due to the government shutdown. While GDP likely continued expanding in the third quarter, the pace may have slowed a bit from the second quarter's 3.8% annualized rate. Slower growth might concern some, but when you look at the data, stocks really don't need robust GDP growth to rise— they just need conditions to turn out better than expected. Regardless of Q3's GDP figure, early Q4 data also shows the economy is moving forward nicely. The S&P Global US Composite Purchasing Managers Index, or PMI—which is a monthly survey of business leaders— continues to reflect growth in both manufacturing and services. October retail sales also showed year-over-year gains, and manufacturers reported improving sentiment heading into Q4. All of these indicators highlight the private sector's resilience. That's why it's always crucial to look beyond just the headline GDP number. Digging into the underlying components reveals how the private sector is actually performing—something that stocks care a lot more about than a single quarterly growth figure.

Next, France's budget deadline.

France is facing a potential government shutdown after lawmakers abandoned 2026 budget talks on Friday. Prime Minister Lecornu is currently focusing on passing stopgap legislation in order to provide more time for negotiations, similar to what was done in February of this year. The latest budget bill needed to pass the lower house by the 23rd of December, but lawmakers announced on Friday that they really didn't see a possibility of a vote before the end of the year. While this outcome extends some fiscal uncertainty into the new year, it really isn't anything new for France's markets, which have recently shown some real resilience in the face of leadership changes and ongoing budget stalemates. The latest development could lead to some short-term market swings, but financial markets really tend to look past political dramas and focus more on broader economic trends.

Finally, a note on seasonal investing myths.

Every December, investors hear references to the so-called "Santa Claus Rally". This is a term that refers to the idea that stocks tend to rise during the final week of December and into the new year. However, much like other seasonal myths, the "Santa Claus Rally" is based more on coincidental historical patterns and really lacks any fundamental basis. Some suggest factors like holiday spending or reduced trading volumes may drive this rally, but these explanations don't really hold up under scrutiny. For instance, retail sales are far less seasonal than many assume, and low trading volumes can just as easily lead to stock price declines as they can to stock price gains. Now, stocks may rise this month, or they may not. But relying on the "Santa Claus Rally" to predict short-term market movements is a risky and really unreliable strategy. Ultimately, while seasonal myths occasionally align with market outcomes, they really do so inconsistently and without any dependable pattern, which makes them really unsuitable for stock market forecasting or long-term investing.

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!