Commentaries

Timely market commentaries from leading investment firms

Are FANG Investors Playing the Role of Greater Fools?

Introduction The greater fool theory is an investing metaphor that suggests that if you pay more for a stock than it is worth (intrinsic value indicates) that you are only doing this on the basis that a fool greater than you will come along and willingly pay you more.

Inverted US Yield Curve? Recession? Not So Fast

Many investors have started to scrutinize the shape of the US Treasury yield curve, worried that a potential yield-curve inversion would mean imminent recession. In our view, things aren’t that simple.

It's Time for Contrarians to Get Bullish on Gold

Gold can’t seem to catch a break. The yellow metal normally acts as a safe haven in times of political and economic strife, but in the face of Turkey’s lira meltdown, investors have taken cover instead in the U.S. dollar. On Monday, the stronger greenback pushed gold to end below $1,200 an ounce for the first time since January 2017.

2Q Corporate Results: All-Time High Sales, Profits and Margins

Corporate results in the second quarter were excellent. S&P sales grew 11%, earnings rose 27% and profit margins expanded to a new all-time high of 11.4%. Fundamentals are driving the stock market higher, not valuations: earnings during the past 1 year and 2 years have risen faster than the S&P index itself. The strong growth in company profits is not due to the net reduction in shares through, for example, corporate buybacks.

A New Super Factor: the Investment Case for Knowledge

We’re pleased to share a new white paper on the market anomaly that rose above value, size, quality, low volatility and momentum factors. Written by Bryce Coward, CFA, the study details the results of first market test of the Knowledge Effect, the tendency of highly innovative companies to deliver excess returns.

Asia on Sale

As Russ notes, in a world with few bargains, one stands out: Asia.

Of Currencies, Trade and Other Clouds

Emerging markets have struggled in the first half of this year amid a storm of uncertainties. Franklin Templeton Emerging Markets Equity’s Chetan Sehgal examines issues that have acted as clouds on the asset class—including a stronger US dollar and trade skirmishes...

De-FANGed Trade?

A review of last month’s market-moving events across countries and asset classes.

Iran Sanctions and Potential Responses: Part I

Trump withdrew from the nuclear deal with Iran in May. Although the rest of the signatories remain committed to the original agreement, the U.S. plans to implement sanctions on Iran in two phases.

Demystifying Big Data: How to Critically Assess Quantitative Investment Signals

As leaders in manager research, we have unique insight into the implementation of big data in equity portfolios. Today, we share our key observations.

The Real Lesson from Turkey’s Crisis

As Turkey’s crisis rumbles on, investors are on the watch for signs of contagion. Emerging markets in general are getting hit, so contagion remains a possibility. Still, there are reasons to believe the crisis will burn out in Turkey itself.

Tripped up by a Low Hurdle

A look at how low interest rates have led to a surge of money losing companies, and what that may mean as interest rates move higher.

Using Dr. Copper to Check the Pulse of the Global Economy

Holy cow! This economy is on fire; witness the second quarter U.S. GDP growth rate of 4.1%. Is it sustainable or a just a temporary spurt? It’s often said that the Copper price has a PHD in economics, because of its widespread use in many diverse industries. That use ranges from homes, factories, and electronics, to power generation and transmission and much more.

The Global Bond Paradox: How Hedging Can Enhance Low Local Yields

Japanese government bonds yield virtually zero. Yields on German bunds remain stuck below 50 basis points (bps). U.K. gilts yield only about 125 bps. Do non-U.S. bonds such as these hold any value to dollar-based investors?

Under Siege: How Trade Wars Affect the World’s Major Automakers

From steel to engines to whole cars, tariffs are shifting the playing field for automakers. Our credit analysis suggests there are no winners in this war: consumers should expect higher sticker prices, companies lower earnings and investors more volatility.