This Week in Review | Market Volatility, US-Colombia Tariff Update, US & EZ GDP (Jan. 31, 2025)

Transcript

Paige Tyson:

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—market volatility.

This week began with a sharp sell off as investors reacted to news that could have implications for companies engaged in offering products and services related to artificial intelligence. We won't join the chorus of speculation on that specific topic but do think it's important for investors to remember: volatility like this is a normal part of bull markets. Since this bull market began in 2022, global markets have experienced nearly a dozen pullbacks and just one correction—where stocks fell just over 10%.

We remain optimistic about stocks this year, but it wouldn't be surprising to see more volatility as investor sentiment reacts to a wide range of economic and political developments. Our recommendation? Embrace it. Volatility works both ways, and investors that remain disciplined through short-term market swings are likely to be rewarded.

Next, the US-Colombia tariff standoff.

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

While Tech drama early in the week stole headlines, another major story was also unfolding. Over the weekend, President Donald Trump proposed— and then quickly suspended—tariffs on Colombia after striking a migrant deportation deal with the Colombian president.

Now, Colombia's economy is relatively small and unlikely to rattle global markets. But these events are a familiar move that reinforces a strategy we saw during President Trump's first term—using tariffs as a negotiation tool instead of embracing rigid long-term trade policy.

Speculation on potential tariffs continues to swirl, but if the administration continues following this pattern, it could ease pressure on certain markets—such as Europe—and help boost stocks. Keep this in mind as talk of tariffs continues.

Finally, US and eurozone GDP.

On Thursday, the latest gross domestic product data for the US and eurozone was released. US GDP grew at a 2.5% annualized pace in the fourth quarter of 2024, extending nearly three years of uninterrupted growth. Eurozone GDP rose a more modest 0.9% over the same period last year.

GDP figures are backward looking and subject to multiple revisions, but in our view, they help explain large disconnects in investor attitudes towards the two regions. And after years of market leadership, investors have become increasingly optimistic about the US, while in Europe, sentiment is vastly more depressed.

Now, European economic growth may not be gangbusters, but stocks can do just fine in that environment. And in our view, the wall of worry is bigger in Europe, leaving more room for positive surprise.

Now, that's it for this week.

Want more insights? Check out our other video series, 3 Things You Need to Know This Week, released every Monday. You can also visit fisherinvestments.com for more updates. Thanks for joining us and don't forget to hit like and subscribe!