The United States economy is full of innovation. It has to be. Manufacturing industries that dominated the economy decades ago - textiles, televisions, even automobiles to a large degree - have moved overseas, where labor and materials costs are lower. Yet the U.S. economy, even during the pandemic and the current period of high inflation, has expanded to record levels. If U.S. corporations weren't innovating, creating new products (such as vaccines and AI) and services (such as Zoom calls) and moving into new markets, the domestic economy would not be growing, and capital would not be flooding into the country. The current high level of the U.S. dollar relative to currencies around the world attests to the confidence that global investors have in the durable and innovative U.S. economy.

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 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.

Two recent inflation reports indicated that overall pricing pressures continue their downward trek. But both also confirmed that inflation remains above the Fed's target of 2.0%. Let's first take a deeper dive into the Consumer Price Index. There were some positive results here. According to the latest CPI report, the overall inflation rate in August of 2.5% was lower than the prior month's 2.9%. That good news was supported by a low reading in the monthly core CPI rate. The core CPI excludes the impact of food and energy and rose 0.3% from July to August, consistent with subdued readings for the past six months. What's still propping up core CPI? Transportation Services (+7.9% YOY) and Shelter (+5.2%). These elements of the index tend to have stickier prices. In contrast, prices for Gasoline and New and Used Cars are lower year over year. The other inflation report was the Producer Price Index. The PPI measures pricing trends farther up the supply chain, at the manufacturing level. Here, we also saw a decline in the rate of inflation. For example, the PPI final demand annual rate through August was 1.7%, compared to 2.1% in July. We expect pricing pressures to continue to ease as the housing market cools, supplies of new vehicles are replenished, and the price of oil stays below $90 per barrel. The Fed lifted the feds fund rate from 0.0% to above 5.25% over the past 24 months, and the hikes evidently have done their part in reducing inflationary pressures. We now look for the U.S. central bank to be lowering rates in 2H24 and 1H25 as their concern shifts toward economic growth. The cuts should start next week.