October brought a significant increase in market volatility and a broad equity sell-off to match the late-January through early-February move lower.
Invesco research reveals a disconnect between market expectations and portfolio allocations in market-cap-weighted funds.
2017 shattered giving records. Strong markets and the prospect of tax reform drove total charitable giving past $400 billion for the first time ever. Grants in fiscal year 2018 reached $1.9 billion at Schwab Charitable, one of the largest national providers of donor-advised funds and other philanthropic services, where nearly 76% of account assets are associated with a financial advisor.
Our Recession Probability Model and Recession Dashboard continue to suggest a recession is likely to begin in early 2020. Investors ignore the yield curve’s signal at their peril.
October has lived up to its reputation as a volatile month as concerns about rising US interest rates, slowing growth in China and upcoming US midterm elections have spooked many investors. Franklin Equity Group offers a few words on the recent turmoil, why volatility can unlock compelling opportunities and why the investment team still sees a compelling case for technology companies.
Steve and Bryce dissected US Treasury bonds, discussing the message of the rates market and how this is directing asset allocation.
Change is good, but some things shouldn’t—and one of those is quarterly publication of my overview of the economy and the markets. I always like to start this commentary with an overview of the economy, as most stock market events are driven by economic events.
Our forecasts continue to favor emerging markets in both the equity and credit markets, says GMO Asset Allocation team member John Thorndike. As of the end of September, the spread between our forecasts for emerging markets equities and large cap U.S. stocks was nearly 8.5%. You have to go back to 2003 to find a wider spread in favor of EM.
There has been a lot of talk this year about the flattening of the US yield curve—which is a graphical representation of the spread between short- and long-term interest-rate instruments.
With the Federal Reserve (Fed) now targeting 2.00–2.25 percent on fed funds, tightening monetary policy is putting increasing pressure on corporate borrowers’ balance sheets across the leveraged credit landscape. We estimate that about 30–50 percent of the increase in short-term borrowing costs to date has passed through to the cost of debt for leveraged credit, depending on sector, and we expect this passthrough to increase over the next 12 months as the Fed raises rates.
Market updates from across the region.
While President Trump often cites the massive trade deficit with China, the real issue in U.S.-China trade relations is not the headline number but the government policies that distort competition, including subsidizing state-owned enterprises, requiring technology transfers, constricting market access in certain industries, and even manipulating the yuan.
US Treasury yields have risen in response to strong economic growth. In the first week of October, the yield on the 10-year bond surged to its highest level in more than seven years. The question is: Do yields have more room to run?
As major U.S. stock indices hit new all-time highs, one of the key uncertainties is whether the House, the Senate, or both could flip to the Democrats on Nov. 6. The infographic below takes a look at what's up for grabs, the current forecasts, and what history offers us on midterm elections and the stock market.
When it comes to US high-yield bank loans, we don’t mince words: we think the risk rarely justifies the potential reward.
A number of market headwinds—including trade tensions, rising interest rates and a general fear the long-running US economic expansion may be facing fatigue—have cast a shadow over the markets in the first half of the year.
Equity investors in the emerging markets (EM) have suffered significantly as a result of the escalation of the Turkish crisis. But a closer look at the EM index reveals that not all emerging markets are in crisis mode.
A review of last month’s market-moving events across countries and asset classes.
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.
The Tax Cuts and Jobs Act has generated a host of questions about tax and charitable planning in 2018 and beyond. Educating clients and guiding them to the most impactful and tax-smart charitable giving can help deepen your relationships and differentiate your practice.
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.
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.”
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.