Two important inflation reports were released this week. Both indicated that overall pricing pressures have retreated, but also confirmed that inflation remains above the Fed's target of 2.0%. Let's first take a dive into the Consumer Price Index. There were some positive results here. According to the CPI report, the overall inflation rate in April of 3.4% was lower than the prior-month's rate of 3.5%. That good news was further supported by a decline in the core CPI rate, which excludes the impact of food and energy and rose at an annual pace of 3.6% over the past year (lower by 20 basis points). What's propping up core CPI? Two main factors: Transportation Services and Shelter, which have stickier prices that don't typically fall sharply. Meantime, pricing pressures for automobiles and food away from home eased. The other inflation report was the Producer Price Index. This news was not as good. The PPI measures pricing trends farther up the supply chain, and showed a modest increase in the rate of inflation. How worrisome is that? Well, we have noted for months that progress will be slow as inflation returns to 2.0%, and nothing was terribly alarming about either of the reports. Looking ahead, we think that the June 2022 CPI rate was the peak reading for the index this cycle, as the housing market cools, supplies of new vehicles are replenished, and the price of oil stays below $90 per barrel. The Fed has lifted the feds fund rate from 0.0% to above 5.25% over the past 18 months, and the rate hikes appear to be reducing inflationary pressures. We look for the U.S. central bank to be lowering rates in 2H24 and 1H25 as their concern shifts toward economic growth.

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 Goldman Sachs Group provides investment banking, securities, and investment management services to corporations, financial institutions, governments, and high-net-worth individuals worldwide. Goldman reorganized its businesses in 4Q22 into three operating segments: Asset & Wealth Management, Global Banking & Markets, and Platform Solutions, with the latter including transaction banking and consumer partnerships.

For the past several weeks, we have highlighted insider-sentiment data from Vickers Stock Research that suggested investors should be cautious. That stance appears to be increasingly validated. Stocks had an impressive rally that saw moves of more than 20% in less than six months, but also resulted in the need for 'perfection' in company performances, the economy, interest rates, domestic politics, and geopolitics. But with geopolitics raging, earnings uncertainty ahead, stubborn inflation, and a fraught political landscape in the U.S., things are certainly not perfect.