The current price of a barrel of the crude oil benchmark grade West Texas Intermediate has fallen below the $80 level, as we expected. That's down from a high near $90 in April but still up 8% from the start of the year. We look for prices to stabilize at these levels for the next few quarters (even as global economic growth remains under pressure due to high interest rates) as future production rates are starting to be scaled back. We look for a barrel of West Texas Intermediate crude oil in 2024 to average $80, in line with last year's average price of $80, with a trading range of $90-$70 for the year. The core drivers behind oil prices in the long term are indeed global demand and global supply. According to the U.S. Energy Information Administration, there was modest excess demand in 2023: global consumption was 101.9 million barrels per day, while global production was 101.8 million barrels. Forecasts for the balance of 2024 and 2025 now call for demand to exceed supply, which is likely to provide a floor to oil prices. Of course, there are always wild cards such as geopolitical developments, ranging from wars (i.e., Russia's invasion of Ukraine), to sanctions (Iran, Venezuela), to turmoil in the Middle East, to the U.S. presidential election. The growth path of the Chinese economy also plays an outsize role in the direction of oil prices. These wild cards can cause prices to fluctuate dramatically. That said, absent the wild cards, the global demand-supply outlook suggests the days of triple-digit oil prices are in the rear-view mirror as the world economy pivots toward cleaner energy solutions.

There's not a lot of room to opine about market forces on Monday morning, as global shares are simply tanking. Fear spiked last week as economic reports in the U.S. pushed the idea that the Fed was taking too much time to cut interest rates from a 'concern' to a 'full-blown panic.' Investors worldwide now sense that a recession in the U.S. is fully on the table. The good news is that the Federal Reserve, after ratcheting up interest rates, now has replenished its tool box and can offer some assistance via lower rates. Mag7 stocks on Monday are all lower, and most gig caps are flat to down 1%.

May Bounce-Back: Our Monthly Survey of the Economy, Interest Rates, and Stocks

The current price of a barrel of the crude oil benchmark grade, West Texas Intermediate, has fallen below the $80 level, as we had expected. That's down from a high near $90 in April but still up 8% from the start of the year. We look for prices to stabilize at these levels for the next few quarters -- despite the onset of the summer driving season -- while global economic growth remains under pressure due to high interest rates. We now look for a barrel of West Texas Intermediate crude oil in 2024 to average $78, compared to last year's average price of $80, with a trading range of $95-$65 for 2024. For 2025, we look for oil prices to continue trending lower as initial forecasts call for a surplus of production next year. The core drivers behind oil prices in the long term are indeed global demand and global supply. According to the U.S. Energy Information Administration, there was modest excess demand in 2023: global consumption was 101.9 million barrels per day, while global production was 101.8 million barrels. Forecasts for the next two years now call for supply to exceed demand, which likely will keep a lid on potential oil-price spikes. Of course, there are always wild cards, such as geopolitical developments, ranging from wars (i.e., Russia's invasion of Ukraine), to sanctions (Iran, Venezuela), to the turmoil in the Middle East. The growth path of the Chinese economy also plays an outsize role in the direction of oil prices. These wild cards can cause prices to fluctuate dramatically. That said, absent the wild cards, the global demand-supply outlook suggests that the days of triple-digit oil prices are in the rear-view mirror as the world economy pivots toward cleaner energy solutions.

Energy may be an Under-Weight sector based on our model, but that doesn't mean it shouldn't be in diversified portfolios. Energy now accounts for 3.7% of S&P 500 market cap; over the past five years, the weighting has ranged from 2% to 10%. We think investors should consider allocating 3%-4% of their diversified portfolios to the Energy group. The sector is outperforming thus far in 2024, with a gain of 14.8% compared to a 7.4% increase in the S&P 500. It underperformed in 2023, with a decline of 4.8%. The sector includes the major integrated firms, as well as exploration & production, refining, and oilfield & drilling services companies. Here are the Energy companies that either are on our Focus List or are used in our model portfolios.

Our list this week shines a light on international stocks. We sorted our database for large-cap international stocks valued above $50 billion and with a High or Medium-High Argus rating for Financial Strength. We then sorted further, looking for stocks in the group that are furthest from their 52-week high, suggesting value. Timing matters, of course, and stocks have been on a tear lately. We ran the same list a month ago and note some shifting today. Roche Holding was on our initial list, but we have since downgraded it to a HOLD. Novo Nordisk has had tremendous attention from investors, but was not on our previous list as it was hitting new highs -- and has fallen from those highs in the past few weeks. Here is our current list of Argus large-cap BUY-rated international stocks that seem to offer value.

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 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 Capital One Financial Corp. (COF); Dominos Pizza Inc (DPZ); Novo Nordisk (NVO); Shell Plc (SHEL) and the Focus List deletions are Alcon Inc. (ALC); Expedia Group Inc (EXPE); Morgan Stanley (MS); Exxon Mobil Corp. (XOM).

U.S. stocks were lower on Friday morning following higher-than-expected inflation numbers, which lowers expectations for a rate cut in the near term. The Producer Price Index (PPI) rose 0.3%. Core PPI rose 0.6%, the largest increase since January 2023, with both readings well ahead of their expected 0.1% increase. The latest readings bring annual PPI to 0.9% and core PPI to 2.6%. On the earnings front, Coinbase Global (COIN) shares rose 15% after it reported a profit. The S&P 500 was nearly flat, up 0.01%, the Dow was down less than 0.1% and the Nasdaq fell 0.2%. Crude oil traded above $78 per barrel and gold was up 0.3% to $2021 per ounce.

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.

Stocks edged higher on Tuesday morning amid an upturn in consumer confidence and reports of strong Cyber Monday sales. Investors also looked ahead to new GDP and inflation data later in the week. The Conference Board said that its consumer confidence index rose to 102.0 in November, up from 99.1 in October and above the Reuters consensus forecast of 101.0. The reading was the first increase after three straight monthly declines. Adobe Analytics reported that consumers spent $12.4 billion online on Cyber Monday, up 9.6% from the prior year. The Dow rose 0.4%, the S&P 0.2%, and the Nasdaq 0.3%. Crude oil rose to $77 per barrel, while gold jumped $24 to trade near $2036 per ounce.

With July 2023 now in the books, the S&P 500, Nasdaq, and Nasdaq 100 have all risen for five consecutive months, tacking on 16%, 25%, and 31%, respectively. For the month, the '500' rose 3%, the Nasdaq, Nasdaq 100 and S&P MidCap 400 all gained 4%, and the Russell 2000 popped 6%.

Monday Tee Up: Here Comes Retail

Stocks were mixed on Tuesday morning ahead of a speech by Fed Chair Jerome Powell. Investors will be watching to see whether Mr. Powell strikes a more hawkish tone after last week's post-rate-hike news conference and strong January employment report. Baidu shares jumped 11% on news that the Chinese tech company would launch a new artificial intelligence chatbot, similar to ChatGPT, in March. The Dow fell 0.2%, the S&P rose 0.1%, and the Nasdaq rose 0.4%. Crude oil rose $3 to $77 per barrel, while gold rose $9 to $1989 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 rose on Monday morning ahead of the Tuesday midterm elections and new inflation data on Thursday. Meta shares rose more than 6% following reports that the company would lay off thousands of workers in order to cut costs. Apple fell 1% after warning of reduced iPhone 14 production due to COVID restrictions in China. The Dow rose 0.7%, the S&P 0.4%, and the Nasdaq 0.1%. Crude oil traded near $94 per barrel, while gold rose $5 to $1682 per ounce.

Monday Tee-Up: Key Inflation Data, CPI & PPI

Stocks were mixed in volatile trading on Thursday morning, a day after Wednesday's sharp selloff, as the S&P continued to approach bear-market levels. Cisco shares fell 13%, despite above-consensus earnings, after the company offered disappointing guidance for the current fiscal fourth quarter. Kohl's also cut its full-year sales and earnings guidance, though the shares rose more than 2% after dropping sharply in the retail selloff on Wednesday. The Dow fell 0.7%, the S&P fell 0.2%, and the Nasdaq rose 1.2%. Crude oil rose slightly to $110 per barrel, while gold rose $31 to $1847 per ounce.

Shell is an integrated oil and gas company that explores for, produces, and refines oil around the world. In 2021, it produced 1.7 million barrels of liquids and 8.7 billion cubic feet of natural gas per day. At year-end 2021, reserves stood at 9.2 billion barrels of oil equivalent, 50% of which consisted of liquids. Its production and reserves are in Europe, Asia, Oceania, Africa, and North and South America. The company operates refineries with capacity of 1.8 mmb/d located in the Americas, Asia, Africa, and Europe and sells 15 mtpa of chemicals. Its largest chemical plants, often integrated with its local refineries, are in Central Europe, China, Singapore, and North America.

We recently raised our rating on the Energy sector to Over-Weight from Market-Weight. Already strong demand for petroleum products (related to global reopening) is now exacerbated by the war in Ukraine, which has led to broad sanctions on Russia and may exclude this major supplier from the global energy markets. Although we expect other counties to add to supply, we expect energy prices to remain elevated at least through year-end. Energy accounts for 3.6% of S&P 500 market cap; over the past five years, the weighting has ranged from 2% to 10%. We think investors should consider allocating 4%-5% of diversified portfolios to the group. The sector is outperforming thus far in 2022, with a gain of 32.3%. It also outperformed in 2021, with a gain of 47.7%. It underperformed in 2020, with a loss of 37.3%, and in 2019, with a gain of 7.6%. Here are some of the Energy sector companies that are on our BUY List. Some also are featured in our model portfolios (Growth & Income, Equity Income, Growth, and Institutional) and in our Focus List.

Shell is an integrated oil and gas company that explores for, produces, and refines oil around the world. In 2020, it produced 1.8 million barrels of liquids and 9.2 billion cubic feet of natural gas per day. At year-end 2020, reserves stood at 9.0 billion barrels of oil equivalent, 52% of which consisted of liquids. Its production and reserves are in Europe, Asia, Oceania, Africa, and North and South America. The company operates refineries with capacity of 2.8 mmb/d located in the Americas, Asia, Africa, and Europe and sells 15 mtpa of chemicals. Its largest chemical plants, often integrated with its local refineries, are in Central Europe, China, Singapore, and North America.

Shell is an integrated oil and gas company that explores for, produces, and refines oil around the world. In 2020, it produced 1.8 million barrels of liquids and 9.2 billion cubic feet of natural gas per day. At year-end 2020, reserves stood at 9.0 billion barrels of oil equivalent, 52% of which consisted of liquids. Its production and reserves are in Europe, Asia, Oceania, Africa, and North and South America. The company operates refineries with capacity of 2.8 mmb/d located in the Americas, Asia, Africa, and Europe and sells 15 mtpa of chemicals. Its largest chemical plants, often integrated with its local refineries, are in Central Europe, China, Singapore, and North America.

Stocks rose strongly on Wednesday morning, led by the Technology and Basic Materials sectors. On the earnings front, Chipotle Mexican Grill rose nearly 9% following strong 4Q results, while CVS Health fell 5%, despite a solid fourth quarter, after offering disappointing guidance for 2022. The Dow rose 0.8%, the S&P 1.2%, and the Nasdaq 1.5%. Crude oil traded near $90 per barrel, while gold rose $5 to $1833 per ounce.