Monday Tee Up: Back to Inflation

Global stocks are picking up the pace. While the S&P 500 has jumped almost 11% in the past month, the EAFA index of large- and mid-cap stocks based in countries other than the U.S. and Canada has risen 10%. Over the past six years, the performance gap has been wider, with the S&P 500 advancing 12% compared to a 7% gain for the EAFE. But the underperformance has given global stocks a valuation advantage, particularly in the area of dividends. The EAFE dividend yield of 2.4% is 80 basis points higher than the comparable S&P 500 dividend yield. We think global dividend stocks now offer opportunity, particularly given the endless speculation over the direction of interest rates in the U.S., which has created market-timing headaches for equity income investors. Those investors have endured recent wide swings in prices for rate-sensitive equity sectors such as Utilities, REITs and MLPs. In our view, investing in international income stocks is one way to increase portfolio diversification while reducing sensitivity to volatile U.S interest rates. Investing in overseas stocks carries its own set of risks, including the impact of currency exchange and geopolitical turmoil. But there are also a number of positives in this asset class for U.S. investors, including a wide selection of companies that pay dividends, robust industry diversification, and, as we have mentioned, higher yields and lower valuations. Argus has recently boosted its global coverage, and recommends the following international dividend stocks, each of which has at least a long-term HOLD rating from an Argus analyst.

Monday Tee Up: Nvidia

Stocks rose on Thursday morning following generally positive inflation data. The Labor Department said that its all-items consumer price index rose 3.2% on a year-over-year basis in July, up from a 3.0% increase in June but below the consensus forecast of 3.3%. Excluding food and energy prices, the core CPI rose 4.7% from the prior year, down from 4.8% in June. On the earnings front, Disney shares rose, despite disappointing fiscal 3Q sales and subscriber numbers, as the company topped the consensus EPS estimate and said that it would resume dividend payments by the end of the year. The Dow rose 0.9%, the S&P 0.9%, and the Nasdaq 1.0%. Crude oil fell 1% to $83.50 per barrel, while gold fell slightly to $1949 per ounce.

Stocks rallied on Friday morning following a better-than-expected April employment report and a recovery in regional bank stocks. The Labor Department said that the U.S. economy generated 253,000 new payroll jobs in April, above the Reuters consensus of 180,000 and a revised 165,000 in March. The unemployment rate fell to 3.4% from 3.5%. The Dow rose 1.2%, the S&P 1.4%, and the Nasdaq 1.7%. Crude oil rose nearly 4% to $71 per barrel, while gold traded near $2022 per ounce.

Stocks finished sharply lower on Thursday after giving up early gains. Investors weighed earnings from a range of major companies, including Disney, PepsiCo, and AbbVie. On the employment front, the Labor Department said that first-time claims for state unemployment benefits rose by 13,000 to 196,000 for the week ended February 4, above the Reuters consensus forecast of 190,000. Continuing claims rose by 38,000 to 1.688 million. The Dow fell 0.73%, the S&P 0.88%, and the Nasdaq 1.02%. Crude oil traded near $78 per barrel, while gold fell $18 to $1860 per ounce.

Global stocks are on a run. While the S&P 500 has jumped almost 8% year-to-date, The EAFA Index of large- and mid-cap stocks based in countries other than the U.S. and Canada has risen 9%. Over the past six months, foreign stocks also have outperformed, climbing 11% versus a 1% decline by the U.S. market. The story is different over the past five years, as the S&P 500 has risen 50% and global stocks have fallen 1%. Even so, the long outperformance has given global stocks a valuation advantage, particularly in the area of dividends. The EAFE dividend yield of 2.7% is 100 basis points higher than the comparable S&P 500 dividend yield. We think global dividend stocks now offer opportunity, particularly given the endless speculation over the direction of interest rates in the U.S., which has created market-timing headaches for equity income investors - who have endured recent wide swings in prices for rate-sensitive equity sectors such as utilities, REITs and MLPs. In our view, investing in international income stocks is one way to increase portfolio diversification while reducing sensitivity to volatile U.S. interest rates. Investing in overseas stocks carries its own set of risks, including the impact of currency exchange and geopolitical turmoil. But there are also a number of positives in this asset class for U.S. investors, including a wide selection, robust industry diversification, and, as we have mentioned, higher yields and lower valuations. Argus recently boosted its global coverage, and recommends the following international dividend stocks, each of which has at least a long-term BUY rating from an Argus analyst. This list of approximately 25 companies offers exposure to eight of the 11 major industrial sectors. The list includes companies from 10 countries.

In this edition, Fortune Brands remodels its business, capital allocations matter more, utilities stocks set to settle, and Nordstrom, Moderna, and Align Technology.

Stocks were mostly lower on Wednesday morning as investors weighed new retail sales data along with a weak earnings report from Target. The Commerce Department said that U.S. retail sales rose 1.3% from the prior month in October, above the Reuters consensus forecast of 1.0% growth and up from a flat reading in September. Target shares dropped 13% after the company reported much weaker than expected 3Q earnings, reflecting the impact of lower consumer discretionary spending. The Dow rose 0.1%, the S&P fell 0.5%, and the Nasdaq fell 1.3%. Crude oil fell more than 2% to $85 per barrel, while gold traded at $1778 per ounce.

Despite more signs of moderating inflation, stocks gave up most of their early gains on Thursday. The Labor Department reported an unexpected 0.5% decline in the July producer price index, the first negative reading since April 2020 at the onset of the pandemic. The data followed a positive reading on consumer prices on Wednesday, and raised prospects for more modest Fed rate hikes at upcoming meetings. On the employment front, new weekly claims for state unemployment benefits rose by 14,000 to 262,000, just below the consensus forecast. Continuing claims also rose slightly from the prior week. The Dow rose 0.08%, the S&P fell 0.07%, and the Nasdaq fell 0.58%. Crude oil rose more than 2% to $94 per barrel, while gold fell $10 to $1804 per ounce.

Dividends are supposed to lend stability to a portfolio. However, U.S.-based income investors have experienced a high degree of volatility in recent years, as the Federal Reserve since 2018 has embarked on two campaigns to raise interest rates, sandwiched around a desperate program that lowered the federal funds rate to zero in order to help the economy recover from the pandemic. The endless speculation over the direction of rates has created market-timing headaches for equity income investors. They have endured wide swings in prices for rate-sensitive equity sectors such as Utilities, REITs and MLPs. In our view, investing in international income stocks is one way to increase portfolio diversification while reducing sensitivity to volatile U.S interest rates. Investing in overseas stocks carries its own set of risks, including the impact of currency exchange and geopolitical turmoil. But there are also a number of positives in this asset class for U.S. investors, including a wide selection, robust industry diversification, higher yields, and lower valuations. Argus has recently boosted its global coverage, and recommends the following international dividend stocks. Note this list of 25 companies offers exposure to eight of the 11 major sectors. The list includes companies from 10 countries.

Looking for a Bottom

This edition features a roundup of analyst research on the Russia-Ukraine conflict, and Campbell, JD.com, and Guidewire.

Stocks were mixed in volatile trading on Monday morning amid continued concerns about the Ukraine conflict and the impact of Fed interest rate hikes. St. Louis Fed President James Bullard reiterated his call for a 100-basis-point rate hike by June in order to combat inflation. The CME Group's FedWatch tool now projects a 67% chance of a 50-basis-point rate hike in March. The Dow fell 0.5%, the S&P fell 0.2%, and the Nasdaq rose 0.7%. Crude oil rose to $94 per barrel, while gold traded near $1866 per ounce.

Stocks edged higher on Monday morning, led by gains in the Energy, Materials, and Financial sectors. Data on inflation expectations from the New York Fed was mixed. Consumers surveyed in October expected prices to be up 5.7% in one year, up from 5.3% in September and the highest reading since the start of the survey in June 2013. However, medium-term expectations for inflation in three years held steady at 4.2% after three months of increases. The Dow rose 0.2%, the S&P was flat, and the Nasdaq rose 0.1%. Crude oil rose to more than $82 per barrel, while gold traded near $1826 per ounce.

Stocks edged higher on Monday morning, led by gains in the Energy, Materials, and Financial sectors. Data on inflation expectations from the New York Fed was mixed. Consumers surveyed in October expected prices to be up 5.7% in one year, up from 5.3% in September and the highest reading since the start of the survey in June 2013. However, medium-term expectations for inflation in three years held steady at 4.2% after three months of increases. The Dow rose 0.2%, the S&P was flat, and the Nasdaq rose 0.1%. Crude oil rose to more than $82 per barrel, while gold traded near $1826 per ounce.

Vickers Stock Research, a subsidiary of Argus Research Group, tracks insider trading and institutional ownership. Form 13-Fs have now come in from 2Q21. We review the 13Fs of major activist investors, including Carl Icahn, Trian Fund Management, Jana Partners, and ValueAct Holdings, among others. Activist investing has evolved in 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.

Stocks were largely flat on Monday morning as investors weighed positive employment data along with the impact of rising Delta variant cases. The Labor Department's JOLTS report said that U.S. job openings rose by 590,000 to 10.1 million on the last day of June, above the consensus forecast of 9.28 million. Hiring also rose to 6.7 million in June from 6.0 million in May. The data came after a strong July employment report on Friday morning. The Dow fell 0.2%, the S&P fell 0.1%, and the Nasdaq rose 0.1%. Crude oil fell more than 3% to $66 per barrel, while gold dropped $28 to $1735 per ounce.

Dividends are supposed to lend stability to a portfolio. However, U.S.-based equity income investors have experienced a high degree of volatility in recent years as the endless speculation over the direction of rates has created market-timing headaches. Investors have endured wide swings in prices for rate-sensitive equity sectors such as utilities, REITs and MLPs. In our view, investing in international income stocks is one way to increase portfolio diversification while reducing sensitivity to volatile U.S interest rates. Investing in overseas stocks carries its own set of risks, including the impact of currency exchange and geopolitical turmoil. But there are also a number of positives in this segment for U.S. investors.

Stocks were mixed on Monday morning amid a new round of first-quarter earnings reports and weaker-than-expected manufacturing and construction data. The Institute for Supply Management said that its factory index fell to 60.7 in April, down from 64.7 in March and below the Reuters consensus forecast of 65.0. Meanwhile, the Commerce Department said that U.S. construction spending rose 0.2% in March, up from a 0.6% decline in February but well below the consensus forecast calling for 1.9% growth. The Dow rose 0.9%, the S&P rose 0.3%, and the Nasdaq fell 0.5%. Crude oil traded near $64.50 per barrel, while gold jumped $27 to $1795 per ounce.

The Day Traders Strike Back: Our Monthly Survey of the Economy, Interest Rates, and Markets

Oil prices, near $52 per barrel of West Texas Intermediate crude, have continued a climb that began in April 2020, when the price was below $20. Though prices are down slightly from recent highs, we expect them to remain in the $45-$55 range this year. We think these relatively high prices will continue to provide near-term support to the Energy sector, which has outperformed the market this year. Within the group, we favor companies with a high exposure to U.S. production, as well as those with a history of growing dividends. Here are Energy companies that are in our Focus List or are used in our Model portfolios.

Stocks rose on Thursday morning, recovering some of their losses after Wednesday's sharp selloff. GDP data was strong. The Commerce Department said that the U.S. economy expanded at a 33.1% annualized rate in the third quarter, a reversal from the 2Q decline of 31.4%. The reading was also above the Bloomberg consensus forecast of 32.0%. On the employment front, the Labor Department said that initial claims for state unemployment benefits fell to 751,000 for the week ended October 24, down from 791,000 a week earlier and below the Bloomberg consensus forecast of 770,000. The Dow rose 0.4%, the S&P 1.0%, and the Nasdaq 1.5%. Crude oil fell more than 3% to $36 per barrel, while gold fell $8 to $1872 per ounce.

Dividends are supposed to lend stability to a portfolio. However, U.S.-based equity income investors have experienced a high degree of volatility in recent years. In our view, investing in international income stocks is one way to increase portfolio diversification while reducing sensitivity to volatile U.S interest rates. Investing in overseas stocks carries its own set of risks, including the impact of currency exchange and geopolitical turmoil. But there are also a number of positives in this segment for U.S. investors. One is a more robust selection of high-quality names. Yields also tend to be higher in overseas markets in general. And finally, valuations can be more attractive.

Stocks were mixed on Tuesday morning as investors weighed prospects for further government stimulus measures and the approval of a coronavirus vaccine in Russia - despite the lack of standard Phase 3 testing. The Labor Department said that its producer price index rose 0.6% in July, above the Reuters consensus forecast of 0.3% and the strongest growth since October 2018. The Dow rose 0.9%, the S&P rose 0.3%, and the Nasdaq fell 0.3%. Crude oil traded near $42 per barrel, while gold dropped more than 4% to $1954 per ounce.

Stocks were mixed on Tuesday morning as investors weighed prospects for further government stimulus measures and the approval of a coronavirus vaccine in Russia - despite the lack of standard Phase 3 testing. The Labor Department said that its producer price index rose 0.6% in July, above the Reuters consensus forecast of 0.3% and the strongest growth since October 2018. The Dow rose 0.9%, the S&P rose 0.3%, and the Nasdaq fell 0.3%. Crude oil traded near $42 per barrel, while gold dropped more than 4% to $1954 per ounce.