The Greek debt drama looks to be entering its final act. On June 17, Greek citizens will cast their votes to either elect a pro-austerity government that would keep the economically eviscerated country in the eurozone, or leave the union and go it alone. Dr. Michael Hasenstab, Templeton Global Bond Fund portfolio manager and SVP and co-director, International Bond Department for Franklin Templeton Fixed Income Group, expects either option is going to be painful for Greece, so the big question in his mind is whether the world is prepared for either outcome. A summary of some of Dr. Hasenstab’s thoughts on what Greece’s next move may mean for investors:
- Hasenstab believes an exit from the eurozone would probably create more financial hardship for Greece than accepting the austerity required to stay.
- Hasenstab thinks a Greek euro exit “could break either way.”
- The ring fences appear to be in place in the rest of Europe, and the ECB is not likely to stand back, in Hasenstab’s view.
- For the euro to survive, Hasenstab thinks some hard rules about long-term financing need to be put in place.
- The debate in Europe has been austerity vs. growth, but to Hasenstab, it’s not a question of “or,” it’s a question of “and.”
- Both Spain and Italy have been undertaking noteworthy liberalization of their labor markets to help improve growth. Read more…
It’s one of those universal truths that from the day their babies are born (or even before they are!) parents are filled with hopes, dreams and fears for their children. Those hopes and dreams typically include a successful career, which often starts with a college education. The thought of a college education, however, can lead to one of parents’ biggest fears—not being able to foot the bill. Given the rising cost of college, financing a four-year (or longer) degree for one or more children can be a daunting prospect for parents juggling day-to-day living expenses while trying to save for other investment goals like their own retirement too.
In observance of 529 Day, the May 29th “financial holiday” celebrating the 529 college savings plan, Beyond Bulls & Bears tapped College Savings Foundation Chairman and Franklin Templeton Division Sales Manager Roger Michaud for the low-down on tackling this common conundrum. Read more…
As the European debt crisis rages on, people in the eurozone are voicing their opinions about austerity measures, bailouts and such, not just on the streets, but also at the polls. As the winds of political change swirl, the future of the eurozone seems to hang in the balance. Investors vote with their dollars, and many see the pool of possible investment candidates in the region narrowing amid the uncertainty. Tucker Scott, portfolio manager of Templeton Foreign Fund, and a vocal fan of a thorough vetting process, says he’s focusing on long-term outlooks, not just today’s headlines. And, he’s finding select European stocks with dividend-growth potential—in some cases even better opportunities than in the U.S.
His thoughts in brief:
- Scott believes the “political will is there” for the eurozone to pull through its crisis, but Greece could be a sacrifice.
- In Scott’s view, once credible, enforceable fiscal restraint is in place in the eurozone on a national level, there should be less worry about sovereign creditworthiness.
- In general, he believes the dividend yield in certain mainland European stocks looks favorable right now compared with certain U.S. stock dividend yields and government bond yields. Read more…
Investors can be a fickle bunch. When the market environment appears unstable, or “risky,” they tend to sit on cash or move their assets into areas which they perceive as “safe,” such as government Treasuries or perhaps gold. In this sense, risk-taking is said to be “off” the table. When the market appears stable, the outlook more positive, and investors are embracing equities, risk is said to be “on.” Given the low-rate environment the markets are stuck in right now, many investors fleeing risk are also probably sacrificing yield at a time when they may need it most in order to meet their investment goals. In the wake of this dilemma, there’s been a lot of talk of dividends, so we turned to Franklin Rising Dividends Fund Manager Don Taylor for some perspective. Read more…
The lingering low-rate environment in the U.S, Eurozone, Japan and some other nations has many yield-seeking investors feeling stuck in the mud. At its April policy meeting, the Federal Reserve pledged to keep its key short-term interest rate (the federal funds target) “exceptionally low” at least through late 2014.1 Some other global central banks, even in emerging nations, have pushed their rates lower too this year to spur growth. On top of that, many countries are also still trying to dig out of debt, but seem to be spinning their wheels. For insights into this sticky debt mess, we turned to Franklin Strategic Income Fund Portfolio Manager Eric Takaha, who happily shared his views on these and other challenges the markets are facing today, and where he’s finding investment opportunities. Key takeaways, in his words:
- In terms of the longer-term outlook, debt is still a major issue. I think we are looking at a number of years before these issues really move out of the headlines.
- In the U.S., we have concerns about tax policy and what that may mean for the deficit going forward.
- From the standpoint of the global financial markets on a short-term basis, there are liquidity measures in place, so the risk of some of the downside scenarios seems to have been pushed off.
- The reason that some governments are able to provide more easing for their markets is that inflation has remained subdued.
- When we look at the corporate markets and think about the yield opportunities relative to the risk, we find that to be an attractive space. Read more…