3 Things You Need to Know This Week | Diplomatic Events, PMIs, Consumer Sentiment

Transcript

Hello and welcome to 3 Things You Need to Know This Week.

This regular series helps you cut through the financial headlines and focus on what really matters for markets. For more market insights, subscribe to our YouTube channel or visit Fisherinvestments.com. And with that, here are three things that you need to know this week.

First, an update on diplomacy.

This week features several high-profile meetings between world leaders. President Donald Trump is set to host Chinese President Xi Jinping at the White House, and this is going to be their first in-person meeting since May. Observers expect the conversation to touch on trade, AI governance and the Middle East conflict. Meanwhile, the UN General Assembly is underway and the main event, called the General Debate, runs from September 22nd through the 28th. Now, during those days, world leaders take turns outlining their national priorities and weighing in on big picture themes like global cooperation, sustainability and collective action for peace. Diplomatic events like these tend to draw heavy media attention, with people watching for signs of meaningful policy agreements. However, more often than not, these meetings are highly choreographed, with politicians sticking to non-committal platitudes rather than concrete policy announcements. So for investors, these gatherings rarely produce outcomes with an immediate, tangible impact on the global economy or stock markets. We encourage investors to remain levelheaded and avoid making reactionary, short-term investment decisions based on diplomatic rhetoric alone.

Next up, September's Flash PMIs.

This week, S&P Global will publish September's Purchasing Manager Index data, or PMIs, for the US, UK, eurozone and Japan. These are surveys sent to private companies that help measure business activity. A reading above 50 generally signals expansion, while a reading below 50 suggests contraction compared with the previous month. So why are PMIs is worth paying attention to? Well, because they're one of the most timely economic indicators that we have. They give us a quick snapshot of the latest economic conditions. In August, all four regions, the US, UK, eurozone and Japan, came in with strong readings. That tells us economic expansion likely continued across major developed economies, extending the same trend that we saw through the first and second quarters of this year. This is important to note because right now there's a lot of gloom about economies outside of the US. But the numbers actually paint a very different picture. Businesses are showing resilience, and economic reality looks healthier than most people appreciate.

Finally, US consumer sentiment.

This Friday, the University of Michigan releases its final September consumer sentiment reading. Consumer sentiment has fluctuated in recent months, but has generally trended downward since the beginning of 2024. The University of Michigan's preliminary reading for September was 47.8, which marked a 7.5% decrease from August's final reading of 51.7 and standing about 13.2% below where it was a year ago. Now, numbers like these can sound worrying, but sentiment measures how people feel about the economy, not what they actually do. And those can be two very different things. The gap between sentiment and reality is, of course, well documented. Consumers have reported feeling gloomy for long stretches, and that makes sense when you consider recent geopolitical conflicts, elevated oil prices and the lingering impacts of high inflation. Yet through all of it, GDP kept growing, employment held up and corporate earnings climbed. In other words, the data told a very different story than the consumer surveys did. Remember, markets tend to move on the gap between what people expect and what reality actually delivers. And that's exactly where weak sentiment can work in your favor. When expectations are low, the bar for reality to clear is lower too. Better than expected economic growth, resilient earnings or any easing of headline fears can turn into a positive surprise. And surprises are what move markets most. So consumer sentiment this soft can help create more room for stocks to climb.

And that's it for this episode of 3 Things You Need to Know This Week.

For more of our market views, check out This Week in Review, released every Friday, or visit Fisherinvestments.com. Thanks for watching, and don't forget to hit Like and Subscribe.