This edition features an oil market update; Amazon's potential in Australia; revisiting our North American airline coverage; and notes from Maersk, Air Liquide, and Allstate.

We recently raised our rating on the Communication Services sector to Over-Weight. In this barbell sector, media and entertainment companies should benefit from robust online activity and the reopening of theme parks and movie theaters. Providers of telecom services should benefit from ARPU gains as the 5G rollout gains traction. The style mix of the sector is approximately one-third value and two-thirds growth. The adjusted pro-forma beta is approximately 1.1 (like the old telecoms), while the yield is 0.9% (reflecting the impact of Google and Facebook). The smoothed growth rate is 7% and the P/E ratio is 21x. The sector accounts for 11% of the S&P 500. We think investors should consider allocating 12%-14% of diversified portfolios to the sector. Here are some of our top picks.

Stocks rose strongly on Wednesday morning ahead of the inauguration of Joseph R. Biden as the nation's 46th president. President Biden enters the White House facing the twin crises of the pandemic and a battered economy, and is expected to move quickly on new stimulus measures and other initiatives. He will also sign a wide range of executive orders reversing Trump administration policies on his first day in office. The Dow rose 0.6%, the S&P 1.1%, and the Nasdaq 1.7%. Crude oil traded near $53.50 per barrel, while gold rose $16 to $1856 per ounce.

Our rating on the Communication Services sector is Over-Weight. While existing pressures on the sector continue, including assaults by regulators on social media companies and intense competition among telecom companies, these concerns have been superseded by COVID-19. In this "barbell" sector, telco giants Verizon and AT&T are now apparent islands of relative stability and secure income. Simultaneously, internet giants Alphabet and Facebook are acting as forums for community concerns about the coronavirus. The style mix of the sector is approximately one-third "value" and two-thirds "growth." The adjusted pro-forma beta is approximately 1.0 (like the old Telecoms), while the yield is 0.9% (reflecting the impact of Google and Facebook). The smoothed growth rate is 7% and the P/E ratio is 21-times. The sector accounts for 11% of the S&P 500. We think investors should consider allocating 12%- 14% of their diversified Portfolios to the sector. Here are some of our top picks.

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 gave up early gains on Wednesday morning following disappointing business activity data. IHS Markit said that its U.S. Composite Purchasing Managers' Index fell to 54.4 in September from 54.6 in August, with gains in manufacturing offset by a decline in services. On the positive side, Nike posted strong fiscal 1Q earnings, driven by more than 80% growth in digital sales. Johnson & Johnson also announced the start of a Phase 3 trial of its single-dose coronavirus vaccine candidate. The Dow fell 0.4%, the S&P 0.8%, and the Nasdaq 1.3%. Crude oil traded near $40 per barrel, while gold fell $39 to $1869 per ounce.

Stocks were mixed on Tuesday morning ahead of the June Federal Reserve meeting, as investors awaited the Fed's latest policy statement and economic outlook on Wednesday. Airline stocks pulled back after a strong multiday rally, while Macy's rose after the retailer said that reopened stores were performing better than expected. The Dow fell 0.8%, the S&P fell 0.6%, and the Nasdaq rose 0.3%. Crude oil traded near $38 per barrel, while gold rose $18 to $1724 per ounce.

We recently raised our rating on the Communication Services sector to Over-Weight from Market-Weight. While existing pressures remain, including assault by regulators on social media companies and intense competition among telecom companies, these concerns have been superseded by COVID-19. In this "barbell" sector, telco giants Verizon and AT&T are now apparent islands of relative stability and secure income. Simultaneously, internet giants Alphabet & Facebook are acting as forums for community concerns around the coronavirus outbreak. Given the lack of historical performance data for the new sector, S&P Dow Jones Indices performed pro-forma back-testing over a 10-year period to determine the general characteristics of the new sector. The style mix is approximately one-third "value" and two-thirds "growth," while the predecessor Telecom sector was 100% value. The adjusted pro-forma beta is approximately 0.8 (like the old Telecoms), while the yield is 0.9% (reflecting the impact of Google and Facebook). The smoothed growth rate is 8% and the P/E ratio is 19.6x. The sector accounts for 10.6% of the S&P 500. We think investors should consider allocating 12%-14% of their diversified Portfolios to the sector.