ARGUS Independent Equity Research Since 1934 ® MARKET WATCH FRIDAY, AUGUST 7, 2020 Market Outlook DAILY SPOTLIGHT: Short Term: Bullish Unemployment Rate Drops to 10.2% PORTFOLIO STRATEGY The US economy added back 1.8 million jobs in July, as companies continued to bring Equity: 60% employees back to work. The unemployment rate dropped from 11.1% in June to 10.2%. Employment rose sharply in Leisure and Hospitality (one-third of the jobs Cash: 10% growth), Retail Trade (though Retail employee levels are still 913,000 below February’s count) and Health Services. Government (census) and Other Services Today’s Market Movers (personal and laundry) also reported growth. The employment data remains fluid. On IMPACT Thursday, the Labor Department reported that another 1.186 million people filed unemployment claims, and the total of continuous claims was 16.6 million. The Global Shares Mixed - broader U6 unemployment rate, which includes persons marginally attached to the US Payrolls Upbeat + labor force and part-time workers who want full-time jobs, stands at 16.5%, down China Tension Grows - from 18% last month but above last July’s reading of 6.9%. We expect the Stimulus Stuck - unemployment rate will remain high through 2020 as the U.S. economy slowly recovers. The stock market is already looking ahead to that recovery, though. We also note that the VIX volatility index remains extremely high, and expect volatile trading Recent Research Review conditions for an extended period. ANET, EQIX, VRTX, DNKN, KKR, TWLO, TRV, LHX, FTV, KLAC, YUM, F, U6 UNEMPLOYMENT RATE (%) AMGN, EMR, IEX, MMP, MNST, EBS, 25 EXPE, FIS, OC, AA, APA, COP, TT, SON, BYD, CBOE, FB 20 Statistics Diary 12-Month S&P 500 Forecast: 2000-3500 15 S&P 500 Current/Next EPS: 133/161 S&P 500 Current Est. P/E: 24.86 10 12-Month S&P P/E Range: 12.4 - 21.7 10-Year Yield: 0.51% 5 12-Mth 10-Yr. Bond Forecast: 0.90-1.50% Current Fed Funds Target: 0.00% 0 12-Month Fed Funds Forecast: 0.00-1.00% 2000 2005 2010 2015 2020 PREVIOUS 200-DAY CLOSE AVERAGE DJIA: 27368.98 26230.07 Stockpicker's Corner S&P 500: 3349.16 3055.05 11108.07 9060.41 PepsiCo Inc. (NYSE: PEP) ...................................................... BUY NASDAQ: PepsiCo is a well-managed company with a valuable brand portfolio, and continues Large/Small Cap. 1.38 1.13 to generate solid growth amid weak demand for many consumer staples. Despite Growth/Value: 1.87 1.60 investments in advertising and marketing programs and foreign currency headwinds, CURRENT RANKING PepsiCo reported strong 2Q20 results and said it would return $7.5 billion in cash to Five-Day Put/Call: 0.65 Neutral shareholders in the form of $5.5 billion in dividend payments and $2.0 billion in share buybacks. We expect cost cutting to continue to benefit earnings, and look for Momentum: 3587000 Negative PepsiCo to achieve its goal of $1 billion in annual cost savings and productivity gains Bullish Sentiment: 20.23% Positive through 2023. We like the current dividend yield of 3.0%. Our target price is $164. Mutual Fund Cash: 2.40% Negative Vickers Insider Index: 2.78 Negative A R G U S R E S E A R C H C O M P A N Y • 6 1 B R O A D W A Y • N E W Y O R K , N. Y. 1 0 0 0 6 • ( 2 1 2 ) 4 2 5 - 7 5 0 0 Please see page 2 for disclaimer information. (AIC), ARGUS ® MARKET WATCH Argus Research Co. (ARC) is an independent investment research provider whose parent company, Argus Investors’ Counsel, Inc. is registered with the U.S. Securities and Exchange Commission. Argus Investors’ Counsel is a subsidiary of The Argus Independent Equity Research Since 1934 Research Group, Inc. Neither The Argus Research Group nor any affiliate is a member of the FINRA or the SIPC. 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Growth/Value: CURRENT RANKING Five-Day Put/Call: Momentum: Bullish Sentiment: Mutual Fund Cash: Vickers Insider Index: A R G U S R E S E A R C H C O M P A N Y • 6 1 B R O A D W A Y • N E W Y O R K , N. Y. 1 0 0 0 6 • ( 2 1 2 ) 4 2 5 - 7 5 0 0 Please see page 2 for disclaimer information.