3 Things You Need to Know This Week | September Seasonal Fears, US Jobs, Eurozone Economy

Transcript

Tim Schluter:

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, a look at a common seasonality myth.

You've probably heard that September has been the worst month for stock market performance. However, while September is the only month with a negative historical average monthly return, this is mostly due to a few outlier years that skew the average to the downside. We don't dispute some seasonal myths can look compelling when you focus on averages, but in reality, September still has positive monthly returns more often than not.

Yes, September's historical average monthly return is negative. But many of September's worst returns occurred during preexisting bear markets, such as in 1931, 1974, and 2022. These economic downturns had fundamental causes that had nothing to do with September itself.

Maybe this September turns out positive, or maybe it doesn't. But more importantly, we expect this bull market to continue. We believe it's dangerous to try to time the market or let seasonal myths distract from our broader market outlook, which is based on fundamental, forward-looking analysis.

Next, the latest on US jobs.

This week's labor market data will provide updates on job openings, layoffs and employment figures for July and August.

While the US economy added only 73,000 jobs in July— well below expectations—and previous month's data were revised downward, it's important to remember that the Bureau of Labor Statistics isn't the only source for this information. Recent controversies surrounding BLS leadership and data accuracy highlight the value of alternative sources, such as payroll processor ADP, whose data is often aligned with BLS revisions.

Large data revisions have been common in recent years, yet the market has continued its upward trend. This is because markets are forward looking and move based on future expectations, not on past data that is subject to change. This week's jobs report will show what has already happened, not what will happen next.

Finally, the eurozone economy.

This week, the eurozone releases data on inflation, retail sales, trade and more to give us a snapshot of how the eurozone economy has been doing. Despite bearish expectations for Europe to start the year, European economic data have been beating expectations more consistently than the US.

While economic growth hasn't been spectacular, history shows stocks can do just fine during periods of modest economic growth. For stocks, the difference between expectations and reality is what matters most. Looking ahead, we believe Europe's economic reality likely continues to exceed dour expectations.

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.

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