We look at ways to de-risk, diversify and differentiate ahead of a turn in the economic cycle.
In light of the Turkish lira and Argentine peso currency drops, fears of emerging-market (EM) contagion appear to be on the rise, and various EM currencies have been under pressure. Here, Franklin Templeton Emerging Markets Equity provides perspective on some of the impacted countries in the headlines recently: Argentina, Turkey, South Africa and Indonesia.
The US stock market, as measured by the S&P 500 Index, just reached a historic milestone.
While the U.S. economy remains on solid footing, exogenous risks threaten asset values, market confidence, and the strength of the U.S. economy.
Since 2008, US growth stocks (particularly in faster-growing sectors such as technology) have tended to perform better than US value stocks, as the chart below shows.
A review of last month’s market-moving events across countries and asset classes.
The Brexit clock is ticking as the United Kingdom’s departure from the European Union (EU) is set to take place in March 2019. But is the UK ready to leave? And is there still a chance it won’t?
Despite another interest rate hike in June by the Federal Reserve that raised the target federal funds range to 1.75-2.00%, along with plenty of increased tariff talk and (some) implementation by the Trump administration, the investment world was relatively calm in the second quarter of 2018.
In the title of his quarterly message at the beginning of this year, our outgoing president Sam Stewart referred to a popular rumination of baseball legend Yogi Berra: Seems Like Déjà Vu, All Over Again.
Recently, fears of a slowdown in global growth brought on by a trade war have led to turbulence in cyclical assets. The US Dollar has risen while commodities and emerging markets have struggled.
Modern finance has discovered that stocks that share certain fundamental characteristics called “factors” exhibit different return and risk characteristics than the overall market. These factors or “dimensions of the market” can be classified as: dividend yield, volatility, momentum, quality, size and value.
Today’s popular stocks have literally overwhelmed the stock market in the last four years and six months. To understand today’s financial euphoria, we will analyze three terrific movies made by the actor, Jim Carrey. In Liar Liar, The Truman Show and in Bruce Almighty, we learn morals which we believe should guide us in the long-duration investment process.
Thanks to the Supreme Court’s decision in South Dakota v. Wayfair, Inc., states can now choose to levy sales taxes on online transactions with no physical retail presence within the state. Our chart shows the potential impact on state budgets.
A brief monthly update on what's happening in the municipal bond market.
Given that we are in the later stages of this economic cycle, with factors such as increased trade tensions and geopolitical uncertainty at play, we do expect greater volatility may be ahead. But it’s important to remember that experiencing these ups and downs is a normal aspect of our market environment.
Actions by the U.S. will play an outsized role in the course of global growth. Today we are in the nascent stages of a trade war, with the Trump administration antagonizing important trading partners on three fronts: China, the E.U., and North America.
Halfway through 2018, the S&P 500® Index, which represents the broad U.S. stock market, had gained 2.7%—a relatively modest return that belied the drama of the first six months of the year.
Shortening duration, maintaining an investment-grade portfolio, and generating attractive yields do not have to be competing investment objectives for core fixed-income investors.
As the global economic cycle moves into a more mature stage, monetary policy is becoming generally less accommodative and inflation risk is up. Meanwhile, geopolitical risk has become a fixture of the global landscape. What does all this mean for our outlook at the midway point of 2018?
Investors may be concerned that Fed rate hikes may be bad for bondholders but it’s important to remember the fundamental benefits that bonds may bring to a portfolio no matter which way rates move – capital preservation and appreciation, income, and diversification.
U.S.-China trade concerns have been weighing on investors. Matthews Asia examines the strength of China's underlying fundamentals, the rate of its middle class expansion and domestic consumption.
US small-cap stocks have delivered strong returns in recent years. But value stocks have lagged the broader market. A closer look at what’s driving returns reveals some risks that deserve attention.
A recent US court ruling green-lighting the merger between AT&T and Time Warner marked an historic event that some say could open the door to more merger-and-acquisition (M&A) activity ahead. Sara Araghi, CFA, vice president, research analyst, Franklin Equity Group, and Marc Kremer, CFA, research analyst, Franklin Templeton Fixed Income Group, discuss some of the possible implications.
Energy equities have underperformed the S&P 500 materially over the last five years. While spot oil prices have risen significantly over the last twelve months, longer dated oil prices have not, and energy equities have remained under pressure.
The big three central banks (Federal Reserve, European Central Bank and the Bank of Japan) met this week to review their monetary stance. In this mid-quarter update, we share our analysis, The Monetary Policy Pitchfork.
As the Trump administration continues to threaten tariffs targeting a variety of imported goods, from electronics to washing machines to automobiles, many market commentators have suggested the US-led trade skirmishes could turn into a trade war.
Last week, in Bubble-Like Stock Valuations Miss $3.4 Trillion in Hidden Assets, Bloomberg detailed how traditional accounting can make a company’s fundamentals “look a lot worse than they are.” In the article, New York University’s Professor Baruch Lev weighs in. “You get numbers which are highly inflated for some companies and are understated for other companies.”
Market updates from across the region.
Imagine that your goal is to maximize the total return of your portfolio. You can either invest your portfolio 100% in stocks or split the portfolio equally between stocks and an uncorrelated strategy with an annual return that is 1% less than stocks.
At Franklin Templeton’s recent Global Investor Forum in New York, our CEO Greg Johnson participated in a panel discussion with three other CEOs in the financial services industry: James Gorman of Morgan Stanley; Jay Hooley of State Street and Barry Stowe of Jackson National Life.
As the Trump administration’s on-again, off-again trade war with China continues to create uncertainty for investors, we sat down with geopolitical strategist Peter Zeihan to learn more about the tariff program and what it could mean for the US economy.
On May 14, new MSRB regulations will require the disclosure of the often dramatic markups that retail investors are subject to when buying individual municipal bonds. Will this accelerate the shift into active municipal bond management?
The first quarter of 2018 was remarkable in several ways. We saw record highs in equity markets, but also a fierce resurgence in volatility. To some degree, the first quarter was a Jekyll and Hyde type of period. The first half of the quarter was characterized by a low volatility, momentum driven, continuation of the themes that carried 2017.
A recent report by The Wall Street Journal identified a new generation of supercomputers as the fuel behind Big Oil’s “digital arms race to find oil and trim costs.” Indeed, make a quick visit to the websites of most of the Supermajors – that’s BP, Chevron, ExxonMobil, Royal Dutch Shell, Total and Eni in oil speak...
A Wall Street Journal blog on Wednesday warned that the emerging-market trade is under threat. But we think investors shouldn’t be swayed by short-term market moves. History shows that EM equity performance cycles typically unfold over several years.
Two of our largest individual equity holdings announced game-changing transactions at the end of the first and beginning of the second quarter of 2018.
Consumer spending and business fixed investment remained strong, pointing to continued domestic economic growth. Notably, business fixed investment growth, represented by private domestic investment, accelerated to 5.4% year-over-year growth in the fourth quarter of 2017, from a low of 0.71% in the third quarter of 2016.
Rising rates are adding new risks to equity markets. Stocks of companies that are saddled with debt have underperformed recently. And leverage is especially high in sectors widely seen as safe havens.
Most global equity markets declined in the first quarter despite the corporate sector generally reporting reasonable fundamental data. As a result, GMO's 7-year equity forecasts mostly improved over the first quarter. Even with these improvements, International and U.S. equities are still forecast to have flat to negative real returns over the next 7 years, with Emerging equities remaining an exception, forecast to have a positive real return of 1.9%.
Later this year, Rio Tinto will seek board approval to spend $2.2B to build the world’s first “intelligent” mine, a network of robots and autonomous vehicles all working together on the site of the earth’s largest iron ore complex in Western Australia.
Implementing the use of Environmental, Social and Governance (ESG) factors into the investment process presents different challenges for fixed income and equity investors.
Franklin DynaTech Fund is celebrating its 50th anniversary this year. To mark the occasion, we caught up with Franklin Equity Group Vice President Matt Moberg, portfolio manager of the fund. He explains why he thinks we are in the middle of a period of unprecedented innovation where five technology-driven themes are starting to disrupt various industries.
Having our global headquarters in the midst of California’s Silicon Valley gives Franklin Templeton a particular insight into the development of the technology sector. And often, new technologies can influence more than just a single industry or sector. We believe investors should consider potential market impacts although how these technologies will play out remains to be seen.
Worried about rising rates? Don’t take your money out of the municipal market and put it in cash. That could cost you.
The current US equity bull market turned nine years old on March 9, 2018. That’s the second longest run without a correction of 20% on record. It’s natural to wonder if the tide is going to turn.
The period since the financial crisis has been unprecedented in both the duration of the bull market but also the extreme low levels of volatility. As John Authers of the Financial Times recently pointed out, 2017 was the ‘most serenely positive year for world markets in history’.
