Fisher Investments' "Three Things You Need to Know" Jan. 6th

Transcript

Charlie Hoskin:

Welcome to 3 Things You Need to Know This Week. Our regular series designed to help you sift through the noise across financial media and understand what really matters for markets.

And now, here are three things you need to know this week.

First, we want to acknowledge the passing of former President Jimmy Carter. On Thursday, the U.S. stock market will be closed in observance of a national day of mourning.

Next, the eurozone.

The eurozone releases inflation and unemployment numbers on Tuesday. And on Thursday, we'll see retail sales for November. While there's been a lot of talk about struggles in France and Germany, don't forget the eurozone is made up of 20 unique countries, and it's totally normal for some to perform better than others. Countries like Spain, Italy, Ireland, Portugal and Greece have been growing, which help keep the overall eurozone economy moving forward even when big players like Germany and France struggle.

Yes, there are concerns around the eurozone's ability to compete globally, potential U.S. tariffs and long-term issues like aging populations. But none of these have stopped the eurozone from growing in the past, and they likely won't now. The broader global economy continues to grow. Stocks also don't need booming economic growth to rise. While it's important to monitor economic growth around the world, for now, long-term investors shouldn't worry.

Next, what's happening with the Fed?

On Wednesday, the Federal Reserve releases minutes for its December meeting. Investors may recall in that meeting, the Fed cut interest rates by a quarter of a percent, but signaled fewer rate cuts in 2025 than expected. This spooked some investors initially, but remember, Fed forecasts are just that—forecasts. Sometimes they're spot on, but a lot of the time what they say and what they actually do can vary widely. And markets don't depend on rate policy shifts to rise. For instance, even though the timeline for rate cuts kept getting pushed back last year, stocks kept climbing to new highs. In our view, for long-term investors, it's better to tune out the noise and stay focused on the bigger picture.

Last but not least, data from the US.

On Friday, we'll get December's job data, which will include figures for payroll and unemployment. Back in November, the US added 227,000 jobs, but the unemployment rate ticked up slightly from 4.1% to 4.2%. People called it a "Goldilocks" report— not hot enough to stop Fed rate cuts, not cold enough to worry about the health of the economy. However, we caution against trying to predict how any economic report might influence Fed decision making.

Monthly job data can bounce around a lot. And instead of focusing on one month, it's helpful to look at trends over time. For example, the average number of jobs added in October and November was right in line with the last couple of years. And the slight increase in unemployment last year was mostly because more people started looking for work, which is actually a good thing. It shows folks are feeling confident enough to jump back into the job market. While job data tends to grab a lot of headlines, for stocks, they're more like a reflection of what's already happened— not a guide for what's to come.

Thanks for catching this week's episode of 3 Things You Need to Know This Week. For more insights, check out This Week in Review, released every Friday, or visit the Insights section of FisherInvestments.com. Tune in next week and don't forget to subscribe!