Franklin Templeton
The latest research and outlooks in the ProAllocate library
- Equities
Quick Thoughts: The AI Selloff and Portfolio Implications
A sharp selloff in AI-linked tech stocks following the Democratic midterm sweep exposed pre-existing valuation and credit concerns, highlighting AI's outsized concentration across equity, credit and private markets. The piece argues investors should manage this concentration risk through diversification rather than cutting AI exposure outright.
- Equities
Europe's Resilience Re-Rate
European equities have withstood the US-Iran conflict and ECB/BoE rate hikes with resilient earnings upgrades, suggesting their persistent valuation discount to US and global markets is overdone. Rising M&A activity and German fiscal spending add further support for a gradual re-rating of European equities.
- Macro
Quick Thoughts: Bluer Than Blue—Investment Implications
Franklin Templeton Institute argues that Democratic gains in Congress and key governorships will constrain legislation but not deficits, with AI infrastructure, affordability and crypto regulation emerging as key investment flashpoints. It concludes earnings, real yields and the AI investment cycle matter more than Washington's political composition.
- Macro
Macro moments weekly: Healey Budget—breathing space on borrowed time?
The UK's 2025 Budget averts immediate market disruption but leaves major spending pledges unfunded, suggesting further tax rises and household strain ahead. Michael Browne warns an early UK election is more likely than markets currently price into gilts.
- Macro
AOR Update: The Big Picture Beats Politics
Markets are pricing a divided Congress after the midterms, but the size of each party's majority—not which party wins—will determine whether gridlock or a bipartisan spending deal follows. Regardless of outcome, strong GDP growth, robust earnings and a historically reliable post-midterm rally should drive equities higher.
- Emerging Markets
Emerging Markets Insights: Big Tech AI Spending
Emerging-market investors face an AI capex boom straining chip supply chains, a Brazil selloff after Lula's win reshaping rate and currency expectations, and strong Q3 EM earnings led by North Asian tech, prompting a selective, fundamentals-driven approach.
- Equities
Where Investors Aren’t Looking
Putnam's Jackie Cavanaugh and Will Rives argue that AI-driven market concentration has caused investors to overlook resilient consumer spending and durable growth in medical device stocks. Both sectors show strong fundamentals despite being underweighted or undervalued relative to the broader market.
- Macro
Flash Insights: Strong Growth, Emerging Cracks
Franklin Templeton Fixed Income argues the Fed's hawkish pause reflects strong growth and persistent inflation, while warning that AI-driven GDP strength masks eroding household purchasing power and tightening AI financing conditions.
- Emerging Markets
Brazil After the Vote: Separating the Signal from the Noise
Franklin Templeton's Dina Ting and Marcus Weyerer argue Brazil's post-election equity selloff reflected unwinding speculative positioning rather than deteriorating fundamentals. They view fiscal signals like the finance minister pick as key catalysts, favouring gradual entry via single-country ETFs.