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Franklin Templeton Thoughts: US Elections, Global Stimulus, and 2021 Growth

With the November 3rd US elections just days away, the most discussed topic remains how its results may affect investment decisions. No one knows the election results yet or when the losing candidates will concede. However, we are considering many possible scenarios, including:

  • We believe there is a possibility that US taxes will not be raised initially. When President Barack Obama took office during the Great Financial Crisis (GFC), the Obama Administration focused on government spending first, then tax policy later. If this holds true, we can expect growth to likely increase in the first half of 2021.
  • Substantial post-election stimulus packages will likely include infrastructure, and if Joe Biden is elected US president, we believe healthcare and environmental initiatives will be supported, including green bonds.
  • We believe the US Federal Reserve’s (Fed’s) current zero interest-rate policy, and that of many central banks with negative rates globally, will continue for a meaningful period of time. The Fed’s macro policies of buying bonds for liquidity, and incredibly low interest rates until full employment returns, are both positive for corporate credit. We think that it will take time before we return to previous rates of inflation.
  • Today, many developed countries offer near-zero yields or negative interest rates, whereas China’s markets offer government bonds with around 3% yields.
  • We believe China’s long-term plan is to become a serious US economic competitor, and it is on that path. China’s opening of its bond and equity markets, and its currency addition to the International Monetary Fund’s basket, are steps to becoming a bigger part of the global financial community.



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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 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.

Data from third party sources may have been used in the preparation of this material and Franklin Templeton (“FT”) has not independently verified, validated or audited such data. FT 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.

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What are the risks?

All investments involve risk, including possible loss of principal. The value of investments can go down as well as up, and investors may not get back the full amount invested. Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors, or general market conditions. For stocks paying dividends, dividends are not guaranteed, and can increase, decrease or be totally eliminated without notice. Special risks are associated with foreign investing, including currency fluctuations, economic instability and political developments.



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This information has been accurately reproduced, as received from Franklin Templeton Investment Management Limited (FTIML). No information has been omitted which would render the reproduced information inaccurate or misleading. This information is being distributed by MeDirect Bank (Malta) plc to its customers. The information contained in this document is for general information purposes only and is not intended to provide legal or other professional advice nor does it commit MeDirect Bank (Malta) plc to any obligation whatsoever. The information available in this document is not intended to be a suggestion, recommendation or solicitation to buy, hold or sell, any securities and is not guaranteed as to accuracy or completeness.

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