Introduction to This Week in Review
The economy and financial markets can be overwhelming and constantly changing. To help navigate these complexities, Fisher Investments provides a weekly segment called "This Week in Review." This segment highlights key developments from the past week, explains what they could mean for financial markets, and discusses why they matter to investors.
Key Topics Covered This Week
Some of the key topics covered in this week’s review include:
- The resilience of markets in October
- Central bank interest rate policy decisions
- The preliminary Q3 2025 GDP estimate for the eurozone
- Updates on trade deals around the globe
October Market Recap
As of the end of October, markets have notched a new all-time high, with stocks on track to return around 3% for the month. This performance contrasts with October’s historical reputation as a month prone to market crashes, such as those in 1987 and 2008. However, it’s essential to note that these significant drops are not the norm; historically, stocks have risen 61% of the time in October, averaging just under 1% in monthly returns. This underscores the importance of not letting past painful market experiences overly influence expectations for the future. With economic drivers performing well and investor optimism growing, there are tailwinds for a continuing bull market.
Central Bank Meetings
This week saw significant activity from central banks, including announcements from the US Federal Reserve, the Bank of Japan, and the European Central Bank. The Fed and the ECB announced rate cuts, while the Bank of Japan announced a rate hike. The media focused heavily on the Fed’s decision, trying to predict future moves based on Chair Powell’s comments. However, it’s crucial to remember that investors often give central banks too much credit for influencing the economy. The cost to borrow is primarily driven by bank deposits, not by the Fed, and changes in policy rates don’t guarantee specific economic outcomes. Central bank rate decisions, while important, are not the main drivers of markets or the economy.
Q3 2025 GDP Estimates
The eurozone’s preliminary Q3 GDP data showed a 0.2% growth, exceeding analyst expectations. Meanwhile, the US preliminary Q3 data reading was delayed due to the government shutdown. This data supports the view that the global economy will continue to expand, even with the impact of tariffs. It’s also important to remember that stocks don’t require strong GDP growth to rise; they just need conditions to be better than expected. The revision of GDP estimates, with the US revising downwards and Europe revising upwards, aligns with forecasts that non-US stocks should outperform. Looking beyond the surface of GDP readings to understand the private sector’s performance is crucial, as this is what matters most to stocks.
Trade Deal Updates
Trade talks between the US and China have shown positive signs, with a preliminary consensus to pause additional tariffs and consider renewed Chinese purchases of American soybeans. The dispute with Canada, sparked by a television commercial, has resulted in new but largely symbolic tariffs, as most imports remain duty-free due to the US-Mexico-Canada agreement. Recent history suggests that such issues will be resolved once the controversy fades. These developments highlight the market’s ability to adapt to ongoing trade negotiations, with tensions and threats becoming more routine and allowing investors to look past them with greater confidence. While trade negotiations could still cause short-term volatility, the established patterns in these negotiations enable markets to anticipate and navigate fluctuations more easily.
Conclusion
In conclusion, this week’s market review highlights the resilience of markets, the impact of central bank decisions, the growth of the global economy, and the progress in trade deals. Understanding these developments and their implications is crucial for investors. By staying informed and looking beyond the headlines, investors can make more informed decisions and navigate the complexities of the financial markets with greater confidence. For more insights and to stay up-to-date on market analysis, visit FisherInvestments.com or subscribe to their YouTube channel for the latest market insights and analysis.
