Demand from all corners of the globe for the safety and security of U.S. Treasury debt has acted to keep a lid on long-term interest rates, even as the Federal Reserve has raised short-term rates aggressively over the past two-plus years and inflation has remained stubbornly high. Total public debt owed by the U.S. federal government was $34 trillion at the end of 4Q23, according to the DOT. Outside of U.S. investors, the two largest holders of U.S. public debt are Japan, which owns 3.4% of the debt, and China, which owns 2.3%. The other nations among the top 10 holders have 8% of the debt, so the top 10 holders collectively own about 14%. The grand total of U.S. debt owned by foreign holders is $8.0 trillion, or about 24% of the total. This absolute holdings level has increased 200 basis points over the past six months. Japan has been a leader here, as the nation's holdings have increased by 6%, or $55 billion in the past six months. China, meanwhile, has been selling, in part for political reasons. China's current Treasury holdings are lower by about $65 billion over the past year. Over in Europe, countries such as England, France, and Luxembourg have been buyers. We think this type of global demand for U.S. Treasuries should help keep a lid on long-term rates in 2024-2025.

Monday Tee Up: A Busy, Busy Week

With many of the elite stocks technically overbought after huge moves in late 2023 and early 2024, we've done a search for stocks that might provide some 'alpha' if the red-hot AI stocks finally take a break. We examined how much the actual return of an investment might exceed its expected return based on its risk level. We asked our Certified Market Technician Mark Arbeter to study charts for technical signals that favor individual stocks and predict their alpha. Mark reported that it is difficult to find strong technical setups at this time. Still, he looked for stocks that have been beaten down but show evidence that the worst is over. Technical characteristics for these stocks include an existing intermediate- to long-term downtrend, capitulatory volume during weakness followed by an upside reversal, bullish daily and weekly momentum divergences, and (most importantly) signs that the stock is at least attempting to trace out a bottoming pattern. Mark looks for these bottom formations in certain trading patterns. Here's a list of Argus Research BUY-rated stocks that fit Mark's technical model, signally possibly upside ahead.

With earnings season officially under way, the weekly volume of insider transactions reported by Vickers Stock Research has hit cyclical lows and is likely to stay down for multiple weeks. That said, the clear feature characteristic of the transactions that were executed last week is ongoing selling by insides at companies that list of the tech-heavy Nasdaq.

This pick list highlights constituents of the Morningstar US Large Cap Index that we believe offer investors the best risk-adjusted return prospects. Stocks of large-cap companies where neither growth nor value characteristics predominate. Stocks in the top 70% of the capitalization of the U.S. equity market are defined as large cap.

This pick list highlights constituents of the Morningstar US Large Cap Index that we believe offer investors the best risk-adjusted return prospects. Stocks of large-cap companies where neither growth nor value characteristics predominate. Stocks in the top 70% of the capitalization of the U.S. equity market are defined as large cap.

This pick list highlights constituents of the Morningstar US Large Cap Index that we believe offer investors the best risk-adjusted return prospects. Stocks of large-cap companies where neither growth nor value characteristics predominate. Stocks in the top 70% of the capitalization of the U.S. equity market are defined as large cap.

The Portfolio Selector features the Argus Focus List, a group of 30 "best idea" stocks generated and regularly updated by Argus' analysts and investment policy committee. It also includes the director of research’s monthly investment strategy column, stock recommendations and sector picks, economic forecasts, and an asset allocation model. This month, the Focus List additions are Catalent Inc. (CTLT); Splunk Inc (SPLK); Twilio Inc (TWLO); CIENA Corp. (CIEN) and the Focus List deletions are Biogen Inc (BIIB); Arista Networks Inc (ANET); Netflix Inc (NFLX); Shopify Inc (SHOP).

We see some possible gems right now in the Healthcare sector. Overall, we have a sector rating of Market-Weight, but this category is broad and has underperformed the S&P 500 year-to-date. The Healthcare ETF (XLV) is down 1.6% year-to-date compared to a gain of 19% for the S&P 500. We see opportunity to pick up some consistently steady companies, with big brands, and solid financials. These companies are science-focused, enhance lives, and are innovators. Some have recently raised guidance, communicating management's confidence. In our list this week, we look across several subsectors within the industry and pull out some leaders that we like.

This pick list highlights constituents of the Morningstar US Large Cap Index that we believe offer investors the best risk-adjusted return prospects. Stocks of large-cap companies where neither growth nor value characteristics predominate. Stocks in the top 70% of the capitalization of the U.S. equity market are defined as large cap.

The stock market sometimes gives a warning after a large move higher, gets everyone believing that a pullback has finally arrived, and then regroups for a couple of days before the rug is pulled out yet again. On July 27, we saw a pretty ugly reversal in the major indices that looked like the start of a much-anticipated reset. That was not to be, however, with stocks broadly higher on July 28.

This pick list highlights constituents of the Morningstar US Large Cap Index that we believe offer investors the best risk-adjusted return prospects. Stocks of large-cap companies where neither growth nor value characteristics predominate. Stocks in the top 70% of the capitalization of the U.S. equity market are defined as large cap.

Argus Research believes that ESG investing is a smart option to consider. Companies committed to ESG values typically reflect positive traits from management which often translate into better business. ESG (Environmental, Social, Governance) investing has come a long way and continues to grow. According to the Global Sustainable Investment Association, global assets under management in ESG strategies were $40 trillion in 2020, up from $23 trillion in 2016 and on track for $50 trillion by 2025. The discipline, originally known as Socially Responsible Investing, focused at first on excluding companies that conducted business in South Africa, or participated in industries such as tobacco, alcohol, and firearms. In time, the list of industries to avoid increased to include soft drinks, fast food, and oil and gas, among numerous others. But performance of these initial strategies lagged. Now, instead of merely identifying industries to avoid, the discipline promotes "sustainable" business practices across industries that have an "impact" on global issues such as climate, hunger, poverty, disease, shelter, and workers' rights. At Argus Research, we track ESG progress at specific companies as part of our Management analysis -- one of the six points in our proprietary Six-Point System for fundamental research. In addition to reviewing and measuring the ESG proclamations from companies under coverage, we partner with an ESG research firm, JUST Capital, and leverage its analysis and insights. JUST Capital's mission is to drive measurable corporate change to create a stakeholder-centric form of capitalism that reflects the priorities of the American public. JUST utilizes a combination of data-driven research and strategic engagement in an attempt to shift norms and practices in corporate America and the financial markets. JUST ESG Custom Ratings rank stocks in the Russell 1000 on criteria using a scale of 1-100. Drawing on the JUST Capital rankings, we have compiled focused lists of companies followed by Argus Research that are in position to have a "sustainable impact" on the environment, workplace, community, and marketplace. These firms have exemplary records of delivering on the bottom line, and also in improving the environment, contributing to community relations, and showing respect for their employees. We also have a theme model portfolio based in part on ESG criteria. To build the Argus U.S. ESG Theme Model Portfolio, we apply financial concepts such as industry diversification, income generation, risk reduction, and growth at a reasonable price to our various lists. In addition, all stocks must be on the Argus BUY list. For more on JUST Capital's criteria, please visit the JUST Capital website, www.justcapital.com. For more information on the Argus companies, please see our Analyst Reports at www.argusresearch.com. Here are some of the stocks that are currently in the Argus U.S. ESG Theme Model Portfolio.

The Federal Reserve's favorite inflation indicator, the PCE Price Index, will be released by the BEA today. The index differs from the better-known Consumer Price Index in that its composition is changed more frequently and is quicker to reflect the impact of real-time pricing. In the most-recent report, from April, PCE inflation was reported at 4.4% (the latest CPI report, from April, had inflation at 4.0%). At Argus, we forecast a rate of 4.2% for the May PCE Price Index. Core PCE, which removes volatile food and energy prices, was 4.7% in the latest month. We expect the Core PCE to dip to 4.5% this month. Overall, inflation appears to have peaked and is continuing to decline, though the rate of decline may slow. We track 21 inflation measures on a monthly basis. On average, they are indicating that prices are rising at a 3.1% rate year-over-year, down from 3.5% a month ago. We note the numbers would be distorted greatly by the sharp decline in Producer Price Intermediate Goods, which are falling at a 28% rate and likely point to easing prices across the inflation spectrum. Focusing on core inflation, our reading is 4.0%, flat month-over-month. That's largely because, at the other end of the spectrum, sticky prices like shelter and transportation remain high (the Sticky Price Core CPI Index reading is currently 6.1%). Investors are expecting that the Federal Reserve's series of rate hikes will ultimately tame inflation, with the three-year forward expectation rate now down to 3.0% and the five-year forward expectation rate at 2.7%.

Sustainable Impact Investing, or ESG investing, is gaining traction not only with Argus Research clients but also with the global investment community. BlackRock CEO Lawrence Fink, who oversees approximately $9 trillion in assets, announced in January 2020 that his firm would be investing in companies that are making progress on sustainability. He doubled down in his January 2021 letter, calling on company managements to disclose their plans for making their businesses "compatible with a net-zero economy" by 2050. As assets have flowed in over the past 40 years, Sustainable Impact Investing has evolved. The discipline, originally known as Socially Responsible Investing, focused at first on excluding companies that conducted business in South Africa, or participated in industries such as tobacco, alcohol, and firearms. Performance of these initial strategies lagged, and the approach has been modified. Now, instead of merely identifying industries to avoid, the discipline promotes "sustainable" business practices across all industries that can have an "impact" on global issues such as climate, hunger, poverty, disease, shelter, and workers' rights.

Earnings, Employment, Economy: Three Es Keeping Recession at Bay

Our list this week identifies companies that received an Argus target-price increase in April. As the stock prices of these companies approached their target prices, Argus analysts saw those prices going even higher. We are in the thick of earnings season and our analysts are scouring quarterly reports to evaluate how the companies they follow are doing. With economists busy analyzing economic data to determine whether the economy might slip into recession, companies have been attending to their businesses. Some are weathering current economic conditions better than others. The economic pressures are real - including rising interest rates, inflation, the strong dollar, and wavering consumer spending patterns. These stressors are on top of normal competitive pressures, as companies fight to sell their products and services, outmaneuver peers, and make profits. Looking back at April, our analysts found companies where the business outlook is solid - and went through the mechanics of our valuation framework to adjust target prices upwards. Our framework includes analysis of historical multiples, peer multiples, and future dividends and cash flows. Here are the stocks on which we raised target prices in April. All are rated BUY at Argus.

Monday Tee Up: Earnings Pour In

In this edition, global oil inventories face future; feeling the internet's backbone; and initiating coverage of Qualys; and Lithium Americas, Bausch & Lomb and Macy's.

In this edition, railroads may be in for a bumpy ride; ESG has some opportunities; biotechs innovate; and Constellation Brands, Autodesk, and Tencent.

In this edition, railroads may be in for a bumpy ride; ESG has some opportunities; biotechs innovate; and Constellation Brands, Autodesk, and Tencent.

Argus has published its latest Portfolio Selector, which features its popular Focus List. Each month, Director of Research Jim Kelleher, CFA, surveys the team of Argus Research industry analysts for their timeliest recommendations out of the company's fundamental universe of approximately 500 stocks. The Focus List typically includes 30 stocks: turnover is high, as Jim typically adds three or four new stocks per month. Below are the latest additions, all of which are rated BUY at Argus.

The Portfolio Selector features the Argus Focus List, a group of 30 "best idea" stocks generated and regularly updated by Argus' analysts and investment policy committee. It also includes the director of research’s monthly investment strategy column, stock recommendations and sector picks, economic forecasts, and an asset allocation model. This month, the Focus List additions are Raytheon Teches Corporatio (RTX); Biogen Inc (BIIB); Coca-Cola Co (KO); Shopify Inc (SHOP) and the Focus List deletions are Hormel Foods Corp. (HRL); General Dynamics Corp. (GD); AbbVie Inc (ABBV); NXP Semiconductors NV (NXPI).

ESG (Environmental, Social, Governance) investing continues to grow. According to the Global Sustainable Investment Association, global assets under management in ESG strategies had grown to $40 trillion in 2020, up from $23 trillion in 2016 and on track for $50 trillion by 2025. As assets have flowed in over the past 40 years, Sustainable Impact Investing has evolved. The discipline, originally known as Socially Responsible Investing, focused at first on excluding companies that conducted business in South Africa, or participated in industries such as tobacco, alcohol and firearms. In time, the list of industries to avoid increased to include soft drinks, fast food, and oil and gas, among numerous others. Performance of these initial strategies lagged, and the approach has been modified. Now, instead of merely identifying industries to avoid, the discipline promotes "sustainable" business practices across all industries that can have an "impact" on global issues such as the climate, hunger, poverty, disease, shelter, and workers' rights. At Argus Research, we track ESG developments at specific companies as part of our Management analysis - one of the six points in our proprietary Six-Point Fundamental Approach. In addition to reviewing and measuring the ESG proclamations from the companies under coverage, we partner with an ESG research firm, the JUST Capital Foundation, and leverage its analysis and insights on the topic as well. JUST Capital's mission is to drive measurable corporate change to create a stakeholder-centric, inclusive form of capitalism that reflects the priorities of the American public. JUST utilizes a combination of data-driven research and strategic engagement in an attempt to shift norms and practices in corporate America and the financial markets. JUST ESG Custom Ratings rank stocks in the Russell 1000 on criteria using a scale of 1-100. Drawing on the JUST Capital rankings, we have compiled focused lists of companies followed by Argus Research that are in position to have this type of "sustainable impact" on the environment, workplace, community, and marketplace. These firms have exemplary records not only in delivering on the bottom line, but also in improving the environment, contributing to community relations, and showing respect for their employees. We also have a Theme Model Portfolio based in part on the ESG criteria. To build the Argus U.S. ESG Model Portfolio, we applied financial concepts such as industry diversification, income generation, risk reduction and growth at a reasonable price to our various lists. In addition, all stocks must be on the Argus BUY list. Here are the new stocks that have been added to the Argus U.S. ESG Model Portfolio. For more JUST Score details on these companies, and others in the portfolio, please visit the JUST Capital website, www.justcapital.com.

Sustainable Impact Investing, or ESG investing, is gaining traction not only with Argus Research clients but also with the global investment community. BlackRock CEO Lawrence Fink, who oversees approximately $9 trillion in assets, announced in January 2020 that his firm would be investing in companies that are making progress on sustainability. He doubled down in his January 2021 letter, calling on company managements to disclose their plans for making their businesses "compatible with a net-zero economy" by 2050. As assets have flowed in over the past 40 years, Sustainable Impact Investing has evolved. The discipline, originally known as Socially Responsible Investing, focused at first on excluding companies that conducted business in South Africa, or participated in industries such as tobacco, alcohol, and firearms. Performance of these initial strategies lagged, and the approach has been modified. Now, instead of merely identifying industries to avoid, the discipline promotes "sustainable" business practices across all industries that can have an "impact" on global issues such as climate, hunger, poverty, disease, shelter, and workers' rights.

Last week was the busiest of the quarter for corporate earnings, with a fair number of sharp moves in stock prices following above- or below-consensus results or changes in company guidance. Through October 25, Refinitiv reports that 129 S&P 500 companies have announced earnings, with 74% of those coming in ahead of the EPS consensus. The blended (reported and estimated) growth rate for the full quarter, however, is now at 3.3%. That's down from the 4.5% that was expected at the start of the quarter, which is likely a combination of the magnitude of the earnings misses as well as earnings estimates still coming down for those still scheduled to report. Sectors with the strongest beat rates so far have been Healthcare and Communication Services, where 100% of companies reporting have come in ahead of consensus. The biggest laggard has been Consumer Discretionary, where only 47% have exceeded consensus. Energy dominates, with a 119% blended earnings growth rate versus 3Q21, while Financials are at the other end with a 16% earnings decline. Our analysts are always on the lookout for companies that boost their outlooks during earnings season. Management's ability to "raise guidance" can often be a catalyst to strong returns in the quarters ahead. Here is an initial list of BUY-rated companies in Argus coverage for which management has raised guidance or increased its outlook during the 3Q22 EPS reporting season.

Earnings Bend but Don't Break as Economy Muddles On

Stocks fell on Thursday following further hawkish remarks from Fed officials. Weekly jobless claims were higher than expected at 219,000 claims following the prior week's downwardly revised reading of 190,000 claims. The Labor department will release the September jobs report today. The Dow fell 1.2%, the S&P 1.0%, while the Nasdaq was down 0.7%. Crude oil traded above $88 per barrel, while gold fell $1 to $1719 per ounce.

Stocks fell sharply in 3Q 2022, with the S&P 500 down more than 5.2% for the period after a 9% decline in September. Year to date, the index is down 25% and in a bear market. Growth stocks have again been the weakest performers, as sectors such as Technology, Communication Services, and Consumer Discretionary have all lagged the major market indices. The leading sectors were value-oriented, including Utilities, Energy, and Consumer Staples. The average stock in the Argus Universe of Coverage declined 5.6% during the quarter, and the median stock declined 6.9%. The average BUY-rated stock dropped 5.0%, while the average HOLD-rated stock fell 7.1%. Will investors continue to favor value in 4Q22? Will high inflation drive continued outperformance in Energy? Given interest rates that are on the rise, we are thinking 2022 may be the one-in-five years that value leads growth for the full year. Investors seeking value are encouraged to focus on dividends and look for yields in the 3%-4% range. Regarding sectors, our current Over-Weights are Energy, Healthcare, Industrials, and Materials.

Vickers Stock Research, a subsidiary of Argus Research Group, tracks and analyzes trends in insider trading and institutional ownership. Form 13Fs are due 45 days after the end of calendar quarters and have now come in from 2Q22. We like to review the 13Fs of the major activist investors, including Carl Icahn, Trian Fund Management, Jana Partners, and ValueAct Holdings, among others, in order to determine their core holdings and new purchases. Activist investing has evolved in recent years and is now less about generating a short-term return on an underpriced stock and more about achieving long-term returns through an active management/investor partnership. Here are some recent new purchases and key holdings of Activist investors, according to Vickers.

In this edition, Equifax Looking Good, Uber and Lyft Examined, PVH Makes Headway Among Headwinds , and Biogen, American Express, and Boston Beer.

Stocks pared sharp early losses on Wednesday morning after more hot inflation data. The Labor Department reported that its consumer price index rose 9.1% from the prior year in June, up from 8.6% in May and above the Bloomberg consensus forecast of 8.8%. The CPI excluding food and energy rose 5.9% last month. This was down slightly from 6.0% growth in May but above the consensus of 5.7%. The Dow fell 0.4%, the S&P fell 0.1%, and the Nasdaq rose 0.3%. Crude oil rose more than 1% to $97 per barrel, while gold rose $16 to $1741 per ounce.

This pick list highlights constituents of the Morningstar US Mid Cap Index that we believe offer investors the best risk-adjusted return prospects. The market capitalization range for U.S. mid-caps typically falls between $1 billion and $8 billion and represents 20% of the total capitalization of the U.S. equity market.

In this edition, Skyworks soars, Big Biopharma builds immunity to headwinds, and Baidu and the cloud; and Harmonic Drive Systems, Elekta, and Nabtesco.

This edition features GE Aviation's soaring potential, the downshifting price of CarMax, opportunities in the Europe chemicals sector, and Shimano, Biogen, and Kellogg.

The stock market opens Monday with corporate earnings season ramping up. On the docket, more banks and financial companies will report, including some national giants, like Bank of America and American Express, as well as many regional banks. Other key companies reporting this week include IBM, Halliburton, Lockheed Martin, Johnson & Johnson, Tesla, Alcoa, Procter & Gamble, AT&T, Verizon, Netflix, American Airlines, and United Airlines. The wide range of reporting companies will help give economists a sense of how different sectors are weathering inflation, rising interest rates, and the impact of the war in Ukraine and economic sanctions on Russia. Last week, the Dow Jones Industrial average fell 0.4%, the S&P 500 2.4%, and the Nasdaq Composite 3.9%. Year-to-date, the Dow is down 5.2%, the S&P 7.8%, and the Nasdaq 14.7%. On Friday, the Dow fell 0.3%, the S&P 1.2%, and the Nasdaq 2.1%.

This edition features our annual pharmaceutical pipeline, a fresh look at Barry Callebaut's chocolate operation, the buzz around RingCentral, and SAP, Subsea 7, and Just Eat Takeaway.

Stocks fell on Thursday on employment news and rising wholesale prices. The Labor Department reported that first-time jobless claims rose by 23,000 to 230,000, reflecting rising COVID cases. However continuing jobless claims for the week ended January 2 were 1.559 million vs. 1.733 million expected and a revised 1.753 million during the prior week. The Bureau of Labor Statistics reported that the December producer price index rose 0.2% from November and 9.7% year-over-year. The Dow fell 0.5%, the S&P 500 1.4%, and the Nasdaq was down 2.5%. Crude oil traded below $82 per barrel, while gold fell $5 to $1822 per ounce.

This pick list highlights constituents of the Morningstar US Large Cap Index that we believe offer investors the best risk-adjusted return prospects. Stocks of large-cap companies where neither growth nor value characteristics predominate. Stocks in the top 70% of the capitalization of the U.S. equity market are defined as large cap.

This pick list highlights constituents of the Morningstar US Large Cap Index that we believe offer investors the best risk-adjusted return prospects. Stocks of large-cap companies where neither growth nor value characteristics predominate. Stocks in the top 70% of the capitalization of the U.S. equity market are defined as large cap.

This pick list highlights constituents of the Morningstar US Large Cap Index that we believe offer investors the best risk-adjusted return prospects. Stocks of large-cap companies where neither growth nor value characteristics predominate. Stocks in the top 70% of the capitalization of the U.S. equity market are defined as large cap.

Moderating Economy, Still-Strong Earnings: Our Monthly Survey of the Economy, Interest Rates, and Markets

This pick list highlights constituents of the Morningstar US Large Cap Index that we believe offer investors the best risk-adjusted return prospects. Stocks of large-cap companies where neither growth nor value characteristics predominate. Stocks in the top 70% of the capitalization of the U.S. equity market are defined as large cap.

This edition features our midyear auto outlook; a moat upgrade for Nvidia; new solar coverage; and notes from VMware, Pentair, and Biogen.

Stocks rose on Wednesday morning, adding to Tuesday's gains as investors again shrugged off concerns about the Delta variant. On the earnings front, Johnson & Johnson posted better-than-expected second-quarter results and raised its full-year guidance. Netflix shares dropped 4% after the company posted disappointing 2Q earnings and projected below-consensus subscriber growth in 3Q. The Dow rose 0.7%, the S&P 0.6%, and the Nasdaq 0.5%. Crude oil traded near $69 per barrel, while gold fell $8 to $1803 per ounce.

This pick list highlights constituents of the Morningstar US Large Cap Index that we believe offer investors the best risk-adjusted return prospects. Stocks of large-cap companies where neither growth nor value characteristics predominate. Stocks in the top 70% of the capitalization of the U.S. equity market are defined as large cap.

This edition features new coverage of DoorDash and Essential Utilities; a closer look at the S&P-IHS Markit merger; Biogen's newly approved Alzheimer's treatment; Snowflake's investor day; and a moat downgrade for Enbridge.

This pick list highlights constituents of the Morningstar US Large Cap Index that we believe offer investors the best risk-adjusted return prospects. Stocks of large-cap companies where neither growth nor value characteristics predominate. Stocks in the top 70% of the capitalization of the U.S. equity market are defined as large cap.

This pick list highlights constituents of the Morningstar US Large Cap Index that we believe offer investors the best risk-adjusted return prospects. Stocks of large-cap companies where neither growth nor value characteristics predominate. Stocks in the top 70% of the capitalization of the U.S. equity market are defined as large cap.

This pick list highlights constituents of the Morningstar US Large Cap Index that we believe offer investors the best risk-adjusted return prospects. Stocks of large-cap companies where neither growth nor value characteristics predominate. Stocks in the top 70% of the capitalization of the U.S. equity market are defined as large cap.