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Big Tech’s Three Identical Strangers
Capital Markets
The U.S. government must determine how to deal with the negative consequences of some of the last decade’s most successful internet-based businesses. Alphabet, Facebook and Amazon grew up as strangers and have developed monopolies in search, social media and in e-commerce. The stock market has been very excited about the control over people they have attained and the “big data”
Three Developments in Europe You May Have Missed over the Summer-and One You Didn't
The months of July and August are traditionally a little quieter for markets in Europe as participants take a summer break. But things don’t stop completely. As the wheels get back up to speed, David Zahn, Franklin Templeton’s Head of European Fixed Income, considers a few developments in Europe over the summer months that might have slipped under the radar.
Powell and the Fed Face ‘Dollar Doom Loop’ Dilemma
Capital Markets
Damned if they keep raising, damned if they don’t. Federal Reserve Chair Jerome Powell and his colleagues face a difficult choice over the next few months – and it is one that could have unpleasant ramifications whatever they decide. The first option for the Federal Open Market Committee (FOMC) is that it continues to deliver on the current plan: Raise
Emerging Vulnerabilities in Emerging Economies
Capital Markets
For many emerging economies, it is imperative to pursue a rebalancing of growth patterns, with a more active approach to managing debt and capital flows and their effects on asset prices, exchange rates, and growth. Otherwise, the dangers of unsustainable growth patterns will bring expansion to an abrupt halt. MILAN – Just before the collapse of the US investment bank
Income Fund Portfolio Managers Discuss Rising Rates and the Impact on Bond Investors
After years of relative calm, bond investors are suddenly facing the reality of rising interest rates in 2018. The portfolio management team for the PIMCO Income Fund, Daniel Ivascyn and Alfred Murata, discuss the implications for investors. Q: What would you say to bond investors who are worried about rising interest rates? Ivascyn: That is a very good question, and
How Contagious Is Turkey?
Capital Markets
The Turkish lira has dropped 35% as of August 16, putting pressure on inflation as well as the country’s debt-heavy corporations and banks. Investor jitters have spread over the past week to some other emerging markets and European banks with Turkish exposure, but we don’t expect contagion to expand much further from here. To be more specific, despite the recent
U.S. Core Inflation Increases Due to Metals Costs, Tariffs
Capital Markets
U.S. consumer prices rose more than expected in July, reinforcing our view that the Fed will continue its gradual pace of interest rate hikes, at least for now. July’s U.S. CPI (Consumer Price Index) report showed core inflation accelerated to a 2.4% annual rate, up from 2.3% in June, as businesses may have started to pass on rising costs of
ESG Integration and Engagement: South Africa Sovereign Credit
Capital Markets
Environmental, social and governance (ESG) indicators are integral to PIMCO’s sovereign credit assessments, which inform our investment decisions. But how exactly do we incorporate ESG considerations into our decisions? In addition to rigorous analysis of ESG and other risk factors, in-country engagement is key for us to gain a holistic sense of broader developments, pinpoint country-specific risks, share in active
EM Stocks in the Time of Trade Tantrums
Capital Markets
Trade war’s becoming a bigger source of concern amongst investors, particularly in emerging markets, because a lot of those economies are very trade dependent. But there’s a difference between the first-order effects, the categories that are actually under trade restriction or trade tariffs now, and what might be happening in future. China exports 2 trillion dollars’ worth of goods every
Emerging Markets—No Reward Without Risk
Capital Markets
Executive Summary Emerging equities are more volatile than developed market equities. This owes little to the volatility of emerging stock markets in local terms and much more to the strong positive correlation between their local stock markets and movements in their currencies. The spring of 2018 was a classic example of this, with US dollar strength driving significant emerging weakness.