This Week in Review | Tariff Developments, OPEC+ and UK Monetary Policy (Feb. 7, 2025)

Transcript

Ben Thistlethwaite:

Hello, and welcome to This Week in Review. This is a weekly segment designed to highlight a few important developments that you might have missed this week. We're going to talk about what they mean for markets, and most importantly, what they mean for investors.

Now, let's review what happened this week.

First, tariffs take center stage.

Global markets dropped sharply Monday morning after President Trump announced new tariffs on Mexico, Canada and China over the weekend. But stocks quickly pared their losses when Mexico's president said the tariffs on her country are temporarily paused following an agreement with President Trump. And later in the same day, Trump confirmed Canadian tariffs were also on hold for 30 days after discussions with Canada's prime minister.

This really highlights the importance of not overreacting to short-term market swings. While tariffs aren't necessarily a positive for the economy, we think there are fears about their negative impact are quite often overblown. As negotiations continue, we suggest staying patient. Trump's tariff policies aren't likely to be as restrictive as many investors fear, and that should be a good thing for stocks.

Next, an OPEC+ meeting.

On Monday, OPEC and its partners, collectively known as OPEC+, announced it would keep oil production levels steady. China's oil demand has weakened and other sources of production growth, mostly across the Americas, has been booming. So, OPEC+ probably won't make big changes to their production levels anytime soon, barring something like an unexpected shock.

While its decisions tend to attract significant attention for the potential impact on oil prices, we'd really advise against overstating its influence. OPEC+ has steadily accounted for less and less of the world's oil supply over time, and production targets tend to be more like rough guidelines. The group also struggles to enforce compliance across member countries. It will continue to be key to oil markets, but it just simply doesn't have the influence that it once did.

Finally, the Bank of England.

On Thursday, the Bank of England lowered its bank rate by a quarter of a percentage point to 4.5%. This move has led to speculation about more cuts to come in 2025. We just don't think it's productive to try to guess what might come next.

UK inflation has been within a pretty normal range since April of last year, and while some may worry things like rising payroll tax hikes or a higher minimum wage may force UK businesses to cut headcount, lower production and raise prices, all of this potentially re-igniting inflation, we just think a resurgence in inflation is unlikely. Global money supply growth remains moderate, and the Bank of England's next actions are always tough to predict. So, instead of speculating, we think it's best to focus on the long-term picture.

That's it for this week.

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