Fisher Investments Reviews: Last Week in Markets—February 12 - February 16

In the US, January retail sales fell 0.8% m/m and rose 0.7% y/y. Though January retail sales disappointed, a single month’s decline doesn’t automatically herald a trend. Moreover, the data are backward-looking, so they don’t tell investors where the economy is headed. January industrial production fell 0.1% m/m but was flat y/y. Manufacturing production fell 0.5% m/m and 0.9% y/y. January headline consumer prices rose 0.3% m/m and decelerated to 3.1% y/y—both higher than forecast. January core consumer prices (which exclude food and energy) rose 0.4% m/m and remained steady at 3.9% y/y—a 2½-year low. While inflation reports and speculation over how the Fed might respond can contribute to market volatility, rate cuts aren’t necessary for equities to keep rising, in our view. For more, please see our 2/13/2024 commentary “Weighing the January CPI’s Inflation ‘Disappointment.”

In the UK, January headline consumer prices decreased 0.6% m/m but rose 4.0% y/y, the same y/y rate as December. January core consumer prices decreased 0.9% m/m but rose 5.1% y/y, also matching December’s rate. January retail sales increased 3.4% m/m and 0.7% y/y—surpassing forecasts. The unemployment rate was 3.8% in the three months ending December 2023. December industrial production rose 0.6% m/m and 0.6% y/y. December manufacturing production increased 0.8% m/m and 2.3% y/y—both above expectations. The first estimate of Q4 2023 GDP showed a 0.3% q/q and 0.2% y/y contraction. This is the UK’s second consecutive quarterly GDP decline—qualifying as recession based on one popular definition. However, this weakness isn’t new or surprising to stocks in our view. For more, please see our 2/15/2024 commentary “Assessing the UK and Japan’s ‘Recessions.’” In the eurozone, the second estimate of Q4 2023 GDP remained flat q/q but expanded 0.1% y/y, both in line with previous estimates. December industrial production rose 2.6% m/m and 1.2% y/y, both surpassing forecasts.

In Japan, the first estimate of Q4 2023 GDP showed a 0.1% q/q and 0.4% annualized contraction—both disappointing expectations. December industrial production rose 1.4% m/m but fell 1.0% y/y.

The Week Ahead:

The US, UK, eurozone and Japan report flash February purchasing managers’ indexes (PMIs). The eurozone releases final January inflation data. Japan reports preliminary January trade data.

Source for all data cited is FactSet. This update constitutes the general views of Fisher Investments and should not be regarded as personalized investment advice. No assurances are made we will continue to hold these views, which may change at any time based on new information, analysis or reconsideration. In addition, no assurances are made regarding the accuracy of any forecast made herein. Global equities are represented by the MSCI World Index. The MSCI World Index measures the performance of selected stocks in 23 developed countries and is presented net of dividend withholding taxes and uses the maximum rate applicable to non-resident institutional investors who do not benefit from double taxation treaties. Past performance is no guarantee of future results. A risk of loss is involved with investments in stock markets.