Fisher Investments - This Week In Review (Nov. 22, 2024)

Transcript

Speaker:

Hello and welcome to Fisher Investments This Week in Review.

The economy and markets can feel dizzying and ever changing. That's where we can help. This weekly segment is designed to highlight a few things you may have missed this week, and what they mean for financial markets, and most importantly, investors. My name is Mackenzie Whitaker, I'm a Group Vice President here at Fisher Investments. Now let's review what happened this week.

First, let's talk about Purchasing Manager Indexes, or PMIs. The term PMI might sound technical, but this indicator is simply based on surveys of how companies view the health of their business. A reading above 50 means more businesses are growing and below 50 means more are contracting. These surveys cover both manufacturing and service industries and when combined, give us a broad picture of economic health. Data can vary from month to month, but services, which makes up most of the economy in developed countries, have been strong, while manufacturing has experienced headwinds. When you aggregate PMI data from countries around the world, the global PMI measure has remained in the growth zone since early 2023, suggesting the world's economy has been chugging along fine. A positive for stocks.

Next, let's look at another economic indicator, the Leading Economic Index, or LEI. LEI compiles various economic indicators and is published monthly by the Conference Board, a nonprofit business research organization. LEI is designed to help predict future movements of the economy, giving a forward-looking snapshot of economic trends typically spanning 6 to 12 months into the future. On Thursday, the Conference Board reported that LEI dropped by 0.4% in October from the previous month, extending a yearslong downward trend. Normally, a decline like this signals a warning about a possible recession, but so far that hasn't happened.

This is partly because the LEI focuses more on manufacturing, which makes up a smaller part of the US economy. The services sector plays a bigger role, which makes the overall economy a bit harder to predict using the traditional indicators included in LEI. While LEI can still provide some valuable insights, in our view, it doesn't necessarily foretell where the economy is headed. Finally, consumer sentiment. On Friday, the University of Michigan released its final survey results showing consumer sentiment rose from October to November.

Overall, this metric has shown that people's outlooks have improved over the last few years, though the trend has been uneven. This upward trend makes sense because inflation has been easing, wages have been increasing, and data broadly suggests the economy is in better shape than many thought. However, compared to historical averages, consumer sentiment still has room to grow, in our view. If this trend continues, it could give people more confidence to invest, which could boost the stock market further. And that's This Week in Review.

To learn more about what we're watching each week, check out our other series, Three Things You Need to Know This Week, released each Monday. You can also visit FisherInvestments.com for more insights. Thanks for joining us and don't forget to subscribe!