Fisher Investments - This Week In Review (Jan. 24, 2025)

Transcript

Tim Schluter:

Hello, and welcome to This Week in Review. This weekly segment is designed to highlight a few important developments you may have missed this week, what they mean for markets and most importantly, for investors.

Now, let's review what happened this week.

First up—US politics.

As a reminder, when it comes to politics, we're agnostic and solely focus on the potential market implications arising from political developments.

On Tuesday, Donald Trump began his second term as president of the United States. On his first official day in office, the nation's 47th president signed a record 26 executive orders. While that sounds like a big deal, markets didn't seem to overreact. In fact, stocks rose globally, and volatility remained relatively normal.

We think this dynamic illustrates a timeless lesson for investors: Stocks pre-price all widely known information.

Most of President Trump's executive orders align with campaign rhetoric that's been long anticipated. So, we aren't surprised stocks took things in stride. We're constantly keeping an eye on Washington for updates. But, for now, it seems markets are benefiting from some degree of political clarity.

Next, the US debt ceiling.

On Tuesday, the US Treasury announced that it would take extraordinary steps to stay under the debt ceiling. This may seem extreme, but Congress has faced these deadlines time and time again.

While negotiations may create some short-term uncertainty, lawmakers almost always strike a deal, usually just in time to avoid any real disruptions. One more point to keep in mind— the US Treasury collects more than enough tax revenue to pay interest on the nation's debt. This means that, if needed, they can prioritize those payments, making a true default very unlikely.

We understand investor fears surrounding US debt. It's an issue we watch closely. But at this time, we don't think there's anything here that are problematic for the economy or markets.

Finally, corporate earnings.

Earnings season is in full swing, and a number of high-profile companies have already reported results. Compared to a year ago, analysts expect fourth quarter earnings to rise 12.5% and revenue to do so by 4.7%. If correct, these numbers will mark the sixth straight quarter of earnings growth in the US.

Some investors worry that stocks rely too heavily on big Tech and Tech-like companies, such as Amazon, Apple, Tesla and other Magnificent Seven companies. But even if you remove the Mag Seven companies, earnings are still projected to grow by 9.7%. In fact, seven out of 11 sectors are expected to report year-over-year increases, with six sectors showing the potential for double-digit growth.

Now, earnings are backward-looking and don't necessarily tell you what will happen next, but to us, these reports are a good sign that underlying fundamentals of businesses are healthy.

That's it for this week.

If you want more insights, check out our other show, 3 Things You Need to Know This Week, released each Monday. You can also visit fisherinvestments.com for our latest market perspectives. Thanks for joining us and don't forget to hit like and subscribe!