Bringing the Economy Back from Life Support
With recent data showing a coronavirus-driven recession in the United States appears inevitable, the question for many investors is how long it will last. Sonal Desai, Chief Investment Officer, Franklin Templeton Fixed Income, weighs in on the differences between this one and other recessionary periods—and whether policymakers can engineer a recovery.
Actively Managed Funds Fail When Needed the Most
Advisors had little use for actively managed funds over the recent bull market; index funds did exceptionally well. But just when those actively managed funds were most needed – over the recent market downturn – they failed to protect investors.
Is the Market Still Overvalued?
Here is a summary of the four market valuation indicators we update on a monthly basis.
- The Crestmont Research P/E Ratio
- The cyclical P/E ratio using the trailing 10-year earnings as the divisor
- The Q Ratio, which is the total price of the market divided by its replacement cost
- The relationship of the S&P Composite price to a regression trendline
The Latest Look at the Total Return Roller Coaster
Here's an interesting set of charts that will especially resonate with those of us who follow economic and market cycles. Imagine that five years ago you invested $10,000 in the S&P 500. How much would it be worth today, with dividends reinvested but adjusted for inflation? The purchasing power of your investment has increased to $12,854 for an annualized real return of 5.03%.
As Markets Burn
Major adjustments in capital markets around the globe have changed our long-term expected return forecasts for the 100+ assets we model. Before the corona crash we forecast long-term real returns for US equities to be only 1% a year. Now new, lower valuations suggest higher returns.
Aaand It’s Gone…The Biggest Support For Asset Prices
With the economy shut down, layoffs in the millions, and no clear visibility about the economic recovery post-pandemic, companies are going to become vastly more conservative on the use of their cash. Given that source of market liquidity is now gone, the market will have a much tougher time maintaining current levels, much less going higher.
Which ETFs Will the Fed Buy?
The US Federal Reserve announced it would buy exchange-traded funds (ETFs) as part of a range of measures to help support the markets in the wake of the coronavirus. David Mann, Head of Capital Markets, Global ETFs, examines which ETFs it might actually buy, and when.
Record Unemployment Claims and Oil's Best Day Ever
A head-spinning 6.6 million Americans filed new claims for unemployment benefits this week bringing the two-week total to 10 million. That’s more than the combined populations of Los Angeles and Chicago.
Looking Back at the Markets in March and Ahead to April 2020
March was a really tough month. After a terrible February, all major stock indices were down by double digits, leading to significant declines for the quarter as a whole. All of the major indices ended the month and quarter below their 200-day moving averages, often a sign of more trouble ahead.