Pricing pressures are hot, primarily at the producer level. Further, after months of below-target inflation readings, mainstream measures of inflation are ticking higher as well, compared to the deflationary lows of the pandemic. Still, we don't think the Federal Reserve is planning to change its approach to low interest rates, and Chairman Powell has said that the central bank is willing to let inflation rise above its 2% target in exchange for a continued decline in unemployment. We track 17 inflation measures on a monthly basis. On average, they indicate that prices are rising at an 8.2% rate, ahead of last month's 7.9%. But drilling down to core inflation -- which we obtain by averaging Core CPI, core GDP PCE, market-based PCE Ex-Food & Energy, the five-year forward inflation expectation rate, and the 10-year TIPs Break-even Interest Rate -- our reading is 3.0%, with the all-important five-year target rate at 2.1%. The big increases in recent months have come at the producer level, as the PPI for Intermediate Unprocessed goods, for example, is now 54%, and the PPI for Intermediate Processed Goods is 23%. Much of this activity is driven by the recovery in commodity prices, including oil (which has more than tripled year-over year). The Fed's inflation forecasts call for a core inflation reading of 3.4% in 2021 and 2.1% in 2022.

The 10-year Treasury yield, which has been flat to a bit lower since late March, broke lower last week. Yields fell as low as 1.27% on Thursday, the lowest since February 16. Back in March, yields ran up to the 1.76% level, but have very slowly been dribbling lower (to the surprise of many investors). With Tuesday's hot Consumer Price Index, which saw prices rise 0.9% versus an expected 0.5%, yields shot higher. For the day, the 10-year yield closed at 1.42%.

The 10-year Treasury yield, which has been flat to a bit lower since late March, broke lower on Tuesday. Yields fell as low as 1.35% and finished near 1.37%, the lowest since February 23. Yields had run up to the 1.76% level, but have very slowly been dribbling lower to the surprise of many. Aren't we seeing rampant inflation in many areas of the economy? It seems the bond market views most of that as just temporary, driven by supply issues due to the pandemic.

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.

Stocks were largely flat at midday on Friday, with gains in the Financial and Technology sectors and losses in Healthcare and Real Estate. The University of Michigan said that its consumer sentiment index for the first half of June rose to 86.4, up from a final reading of 82.9 in May and above the Reuters consensus forecast of 84.0. The Dow fell 0.2%, the S&P fell 0.1%, and the Nasdaq was flat. Crude oil traded near $71 per barrel, while gold fell $15 to $1882 per ounce.

We often talk about breadth, which is a summation of how the individual components of a major index are performing. This includes advance/decline lines, the percentage of stocks in an index above a certain moving average, the percentage of stocks in an index that are making new 52-week highs or lows, and the percentages of index stocks that are on point-and-figure (P&F) buy signals (known as the Bullish Percent Index, or BPI). Most of these indicators are bullish and have been bullish, which give us confidence that the bull market has room to run. Bearish breadth divergences are common at major intermediate- to long-term market tops -- and right now, we just don't see any.

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.

Pricing pressures are hot, primarily at the producer level. After months of below-target inflation readings, mainstream measures of inflation are starting to tick higher as well. Even so, we don't think the U.S. Federal Reserve is planning to change its approach to low interest rates, and Chairman Powell has even said that the central bank is willing to let inflation rise above its 2% target in exchange for a continued decline in unemployment. We track 14 inflation measures on a monthly basis. On average, they indicate that prices are rising at an 8.4% rate, ahead of last month's reading, which was 6.2%. But drilling down to core inflation (which we obtain by averaging Core CPI, market-based PCE Ex-Food & Energy and the 10-year TIPs Break-even Interest Rate), our reading is 2.1%, only slightly above the Fed's 2.0% target. The big increases in recent months have come at the producer level, as the PPI for Intermediate Unprocessed goods, for example, is now 58% and the PPI for Intermediate Processed Goods is 13%. Much of this price activity is driven by the recent recovery in commodity prices, including oil. Used car prices are also up. The Federal Reserve's inflation forecasts call for a core inflation reading of 2.2% in 2021 and back to 2.0% in 2022.

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 Director of Research Kelleher 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 Monster Beverage Corp. (MNST); Restaurant Brands Intl In (QSR); General Dynamics Corp. (GD); HCA Healthcare Inc (HCA) and the Focus List deletions are Peloton Interactive Inc (PTON); Clorox Co. (CLX); Lockheed Martin Corp. (LMT); Regeneron Phars, Inc (REGN).

Stocks rose on Friday morning, led by the Technology sector, as a disappointing April jobs report diminished concerns that the Fed would cut back on bond purchases. The yield on the 10-year Treasury fell sharply to about 1.55% following the report. The Labor Department said that the U.S. added just 266,000 jobs in April, down from 770,000 in March and well below the Reuters consensus forecast of 978,000. The official unemployment rate ticked up to 6.1% from 6.0% in March. The Dow rose 0.5%, the S&P 0.8%, and the Nasdaq 1.3%. Crude oil traded near $65 per barrel, while gold rose $15 to $1831 per ounce.

Back on April 14, we wrote about the bullish technical outlook for semiconductors, a key Technology industry. At the time, the iShares PHLX Semiconductor (SOXX) and the Van Eck Vectors Semi ETF (SMH) SOXX had just made all-time highs (ATHs). Additionally, nine of 10 major holdings in the SOXX were at or near ATHs.

The Vickers Top Buyers & Sellers is a daily report that identifies the five companies the largest insider purchase transactions based on the dollar value of the transactions as well as the five companies the largest insider sales transactions based on the dollar value of the transactions.

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.