Canada

This website is intended for Canadian Institutional Investors only.

2017 Global Investment Outlook


2017 Global Investment Outlook – September Update

Time to Reset Expectations?

Global markets have been relatively calm this summer despite many uncertainties. Geopolitical risks have continued across the globe, and in some areas, looming monetary policy changes also appear likely ahead. A key question for many investors is whether the sleepy summer period of low volatility will give way to a more turbulent autumn. Franklin Templeton's senior investment leaders offer their perspective on the markets, and discuss where they see opportunities and risks ahead.

Unwinding Quantitative Easing (QE)—Will it Unwind the Markets?

Growth of Central Bank Assets (Trillions of US dollars)1

June 30, 2009 to July 31, 2017

Growth of Central Bank Assets

Many advanced economies are showing moderate growth, leading central bank policy makers to assess when to phase out aggressive stimulus measures. One big question looming over financial markets is how the markets will likely react when central banks start to unwind. There is concern that the US Federal Reserve (Fed) has never unwound such a large amount of assets before, and the likelihood that there are no disruptions is theoretically possible, but seems unlikely in practice. We encourage investors to be ready for that.

Date Recorded: August 29, 2017
Our senior investment leaders discuss the opportunities and risks that shifting central bank policies may bring.

Market Stability or Volatility—How Should Investors Prepare?

Global Corporate Earnings Per Share2 (US dollars)

July 31, 2016 to July 31, 2017

Global Corporate Earnings-per-Share

CBOE Volatility Index (VIX)3

December 31, 2009 to July 31, 2017

CBOE Volatility Index

Corporate earnings have not only been strong, but showing signs of growth around the world—the first time that has happened in quite a while. Ultimately, as long as companies continue to demonstrate earnings growth, we think markets should be able to keep moving higher. Market volatility has trended near historic lows, likely influencing the relatively strong business and consumer confidence that exists today. However, we believe this period of low volatility is unlikely to persist. During the past several years, we have seen a tremendous amount of assets move into passive strategies. When volatility eventually does shift higher, the possibility of indiscriminate selling is one thing we are concerned about from a research point of view.

Date Recorded: August 29, 2017
Our thought leaders weigh in on the strength of this market run and risks investors should consider.

The Elephant in the Investment Room

Global Economic Policy Uncertainty Index4

July 31, 2007 to July 31, 2017

Global Economic Policy Uncertainty

We think the markets have done a reasonably good job looking through some of these non-fundamental bouts of volatility—political, geopolitical, and otherwise—and have held up reasonably well. If you can stick to your main investment thesis, the fundamentals, and a longer-term horizon, you can use these events as opportunities, in our view. What we try to do is determine whether near-term risks are going to affect longer-term fundamentals. More often than not, they tend to be more transitory in nature.

Date Recorded: August 29, 2017
Our investment experts share perspectives about the risks overshadowing the markets today.

Watch the Full Discussion

Date Recorded: August 29, 2017

Meet the Panel

Edward D. Perks

Edward D. Perks, CFA

  • Chief Investment Officer, Franklin Templeton Multi-Asset Solutions
Christopher J. Molumphy

Christopher J. Molumphy, CFA

  • Chief Investment Officer, Franklin Templeton Fixed Income Group
Sonal Desai

Michael Hasenstab, Ph.D.

  • Chief Investment Officer, Templeton Global Macro
Stephen Dover

Stephen H. Dover, CFA

  • Head of Equities

IMPORTANT LEGAL INFORMATION

The information presented herein is considered reliable at the present time, however, we do not represent that it is accurate or complete, or that it should be relied upon as such. Speculation or stated beliefs about future events, such as market and economic conditions, company or security performance, upcoming product offerings or other projections represent the beliefs of the authors and do not necessarily represent the views of Franklin Templeton Investments Corp. General business, market, economic and political conditions could cause actual results to differ materially from what the authors presently anticipate or project. The information presented is not a recommendation or solicitation to buy or sell any securities. Franklin Bissett Investment Management is part of Franklin Templeton Investments Corp. CFA® and Chartered Financial Analyst® are trademarks owned by CFA Institute.

This material is intended to be of general interest only and should not be construed as individual investment advice or a recommendation or solicitation to buy, sell or hold any security or to adopt any investment strategy. It does not constitute legal or tax advice.

The views expressed are those of the investment manager and the comments, opinions and analyses are rendered as of the publication date and may change without notice. The information provided in this material is not intended as a complete analysis of every material fact regarding any country, region or market. All investments involve risks, including possible loss of principal.

Data from third party sources may have been used in the preparation of this material and Franklin Templeton Investments (“FTI”) has not independently verified, validated or audited such data. FTI accepts no liability whatsoever for any loss arising from use of this information and reliance upon the comments, opinions and analyses in the material is at the sole discretion of the user.

Products, services and information may not be available in all jurisdictions and are offered outside the U.S. by other FTI affiliates and/or their distributors as local laws and regulation permits. Please consult your own professional adviser for further information on availability of products and services in your jurisdiction.

FOOTNOTES

  1. Source: Bloomberg. Most recent data available.
  2. Source: MSCI via FactSet. Data presented is 12-month forward earnings per share indexed to 100. US is represented by the MSCI US Index, Europe is represented by the MSCI Europe Index, Japan is represented by the MSCI Japan Index, and emerging markets are represented by the MSCI Emerging Markets Index. Indexes are unmanaged and one cannot directly invest in an index. They do not include fees, expenses or sales charges. Past performance is no indicator or guarantee of future results.
  3. Source: CBOE. The Chicago Board Options Exchange (CBOE) Volatility Index, or VIX, measures the market's expectation of 30-day volatility. It is constructed using implied volatilities of S&P 500 index options. Indexes are unmanaged and one cannot directly invest in them. They do not include fees, expenses or sales charges. Past performance is no indicator or guarantee of future results.
  4. Source: Economic Policy Uncertainty (2017). The Global Economic Policy Uncertainty Index is a news-based index that collects newspaper coverage of economic policy uncertainty.