All posts by PARKERYL

Earnings forecasts are robust, but are there blind spots? … low-income homeowners are on shaky ground … mounting delinquencies … tariffs are the wildcard

As we noted in last Friday’s Digest, our recently completed earnings season was strong, and earnings forecasts are robust.

Our economy appears to be in solid shape.

But as we’ve highlighted in numerous past Digests, we have a K-shaped economy. Higher-income Americans have done quite well in recent years as their assets float atop inflation. However, lower-income Americans have struggled to make ends meet as high prices continue to stretch budgets.

Do the struggles of lower-income Americans signal cracks in our economy that aren’t fully represented in robust earnings forecasts?

Let’s begin by looking at the housing sector.

Low-income homeowners are on shaky ground

In 2013, as part of the broader Ability-to-Repay (ATR) requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act, lenders targeted a debt-to-income (DTI) ratio threshold of 43% when evaluating qualifying borrowers.

A DTI above 43% was seen as increasingly risky since those borrowers have a harder time making payments if financial stress increases.

However, this underwriting standard loosened for loans eligible for purchase by government-sponsored enterprises like Fannie Mae and Freddie Mac. Unfortunately, this paved the way for a marked ramp-up in risky loans.

Here’s The Wall Street Journal:

In 2007, 35% of new FHA [Federal Housing Administration] borrowers had debt-to-income ratios above 43%.

By 2020, 54% did.

As housing prices and inflation surged, borrowers became more stretched.

The FHA kept insuring mortgages to borrowers who were increasingly leveraged. About 64% of FHA borrowers last year exceeded the 43% threshold.

The FHA loan portfolio is far riskier than it was before the 2008 housing crisis.

The WSJ article highlights American Enterprise Institute analysis that estimates that 79% of FHA first-time borrowers have one month or less in financial reserves. Given today’s inflation-elevated prices, this leaves little-to-no financial cushion for many of these borrowers to make their mortgage payments if household expenses rise.

Back to the WSJ:

No surprise, many are missing payments, especially recent borrowers.

About 7.05% of FHA mortgages issued last year went seriously delinquent—90 or more days past when a payment is due—within 12 months. That’s more than at the 2008 peak of the subprime bubble (7.02%).

According to the Mortgage Bankers Association, while the “seriously delinquent” rate for conventional loans climbed just 2 basis points over the year ending in Q4 2024, the “seriously delinquent” rate for FHA and VA loans exploded 70 basis points.

In February, the Intercontinental Exchange monthly report on the housing market concluded that FHA and Veterans Affairs loans delinquencies are “likely to serve as canaries in the coal mine for mortgage performance in this cycle.”

So, why haven’t these delinquencies been a major problem so far?

The WSJ has an answer:

Under the guise of Covid relief, the Biden administration masked the growing troubles in the housing market by paying off borrowers and mortgage servicers to prevent foreclosures.

Of the 52,531 FHA loans last year that went seriously delinquent within their first year, only nine resulted in foreclosure.

The FHA instituted a program that pays mortgage servicers to make borrowers’ missed payments for them. Missed payments are added to the loan’s principal, but without interest…

One result is that many FHA borrowers owe more than their original mortgage and more than their homes are worth. They are essentially trapped in their homes even if they want to sell and move…

Another result is that home prices keep increasing because borrowers who don’t pay their mortgages—and never should have qualified for loans—can’t get foreclosed on or be forced to sell their homes. 

Without these protective policies in place, we’d likely be seeing significantly more delinquencies, and potentially, foreclosures. Instead, these policies have masked growing weakness in this part of our K-shaped economy.

But we are seeing evidence of this weakness in many other areas.

Growing pain points for millions of Americans

Millions of Americans are having increasing trouble making their payments on…well, just about everything.

In March of 2020, President Trump initiated a student loan repayment pause under the CARES Act due to Covid-19.

President Biden extended that pause several times, even attempting to implement several initiatives aimed at reducing or eliminating many student loans. Altogether, his efforts targeted roughly 4.3 million borrowers with a loan amount of approximately $153 billion.

Most of those loan cancellations were struck down by the Supreme Court. And with the pause in student loans having ended last September, delinquency payments are back on the rise.

From Forbes, two weeks ago:

After the three-year pandemic pause and resumption of federal student loan repayments, delinquency rates have doubled in just a few months, according to Education Department data obtained by The Washington Post.

Millions of borrowers are struggling to keep up with their monthly bills now that payments are required again.

Roughly four million federal student loan borrowers are already behind on payments, a sharp spike in distress that has alarmed policymakers and advocates. 

Meanwhile, car loan delinquencies are rising.

Here’s Axios from January:

Americans are missing their car payments at the highest rate in decades, according to Fitch Ratings data…

Car costs, including loans and insurance, have soared in an economy where consumers are showing mounting signs of stress.

6.6% of subprime auto borrowers were at least 60 days past due on their loans as of January 2025.

This is the highest level since the agency began collecting data. The fall and winter of 2024 saw the next highest subprime delinquency rates.

Credit card delinquency rates are up too.

Here’s PYMNTS, last month:

Consumers loaded up on their credit cards in the fourth quarter of the year – which encompassed the holiday shopping season lasting through November and December.

Card balances surged by $45 billion, even while delinquency rates are, per the Fed’s language, “elevated” …

We haven’t seen these levels of delinquency in years — and in fact, not since the fourth quarter of 2011.

Let’s not forget home insurance premiums.

Insurance companies are getting hammered on claims as the last 12 months have brought a series of high-impact insurance events (hurricanes, floods, fires). And this means most homeowners are getting hammered on premiums – even if they don’t live in those high-impact areas.

Here’s CBC News:

The average homeowners insurance premium jumped 33% from 2020 to 2023, rising from $1,902 per year to $2,530, according to 2024 research from economists at the University of Pennsylvania’s Wharton School and the University of Wisconsin. By comparison, inflation rose about 18% during that same time period…

Yet even property owners in states considered less vulnerable to climate disasters are now grappling with increased insurance costs and dropped policies — issues that threaten to undermine property values…

“One thing that is surprising is that Kansas and Nebraska and these places in the middle of the country are also seeing these huge increases in insurance.”

Bottom line: Altogether, lower-income Americans are feeling increased financial pressure. Have we captured this risk fully in our earnings projections?

Now, let’s add tens of thousands of Americans who are, or will be, out of jobs as DOGE trims the federal workforce

The good news is that the unemployment rate remains relatively low. The bad news is that employers aren’t eager to hire. Last December, a Bank of America analyst referred to today’s market situation as a “low-hire, low-fire environment.”

What’s going to happen when tens of thousands of now-fired federal workers enter this “low-hire” labor pool?

What are the knock-on effects for their mortgage payments… student loans… credit card bills… and overall monthly budgets?

The uncertainty of our escalating trade war

As we’ve been highlighting in today’s Digest, lower-income Americans are running out of room to absorb additional financial pressure. But it appears that’s what’s on the way with tariffs.

As I’ve noted before, if tariffs are a brief tool used to negotiate lower reciprocal tariffs from other nations, that’s one thing. But the longer that tariffs remain in effect (and/or the threat of tariffs), the greater the risk of meaningful economic damage.

We’re running long today, so I’ll let former President Ronald Reagan make this point.

From Reagan in 1987:

At first, when someone says “let’s impose tariffs on foreign imports, it looks like they’re doing the patriotic thing by protecting American products and jobs. And sometimes, for short while it works. But only for a short time…

High tariffs inevitably lead to retaliation by foreign countries and the triggering of fierce trade wars. The result is more and more tariffs. Higher and higher trade barriers and less and less competition.

Soon, because of the prices made artificially high by tariffs that subsidize inefficiency and poor management, people stop buying.

Then the worst happens.

Markets shrink and collapse, businesses and industries shut down, and millions of people lose their jobs…

Over the long run, [tariffs] hurt every American worker and consumer.

To be clear, we’re not predicting this grim outcome.

But the U.S. consumers in the lower half of our K-shaped economy are running out of financial breathing room. So, tariff-related economic damage doesn’t need to be severe to push these consumers over the proverbial cliff-edge, impacting corporate profits…our economy…and our portfolios.

For everyone’s sake, let’s hope we avoid this.

We’ll continue to monitor these developments in the Digest.

Shifting gears, a quick reminder before we sign off…

This Thursday is Nvidia’s “Quantum Day.” It’s going to bring together industry leaders, developers, and partners to explore the future of quantum computing.

Legendary investor Louis Navellier believes Nvidia will also announce a big move into quantum computing – and potentially, a partnership with one specific small-cap quantum company. If this happens, Louis believes that this company’s small-cap stock has 50X-return potential.

Last week, Louis held a live event to fill in the details. If you missed it, you can catch the free replay right here.

From Louis:

This Thursday,I believe Nvidia will stake its claim in the quantum computing space. And when it does, this little-known top pick could erupt overnight.

Last week, I revealed everything you need to know about Q-Day – including details on my No. 1 stock pick that could explode in the wake of NVIDIA’s announcement.

I’m telling folks about it before Nvidia’s Q-Day on March 20.

My goal for this briefing is to get you AHEAD of the crowd… AHEAD of the news outlets…

Here’s the link again for Louis free briefing.

Have a good evening,

Jeff Remsburg

In the second part of Global Finance’s conversation with former US Secretary of Commerce Wilbur Ross—who served during President Trump’s first term—the discussion shifts to the impact of Trump’s tariffs and trade policy on CEOs, CFOs, and key trading partners like Canada, Mexico, and India.

Global Finance: What would you recommend to CEOs and CFOs navigating this climate of uncertainty due to US tariffs and trade policy as they determine their near- and long-term strategies?

Wilbur Ross: Yes, reshoring and nearshoring were some things that would develop momentum in any event. President Trump is going to accelerate that.

Whatever plan people had for relocating production, it would be wise to accelerate it. Now, whether that means moving operations to Mexico or the US, that’s another question. But the days when a company could make one component in one country, a second in another, and a third in yet another—then bring them all to a fourth country for assembly—are ending.

Therefore, it should be more of a question of to what degree you relocate facilities and whether or not to do so, and to a degree where to relocate them. The rules of origin will be much more important to Canada, but particularly to Mexico, than before. So, as long as one incorporates that into their thinking, I think relocation is the wise move to make.

GF: Is the message different for CEOs and CFOs outside the US?

Ross: Yes, it could be if they adopt policies similar to Trump’s. We are moving toward an era where what has been called “protectionism” becomes much more of a centerpiece of everyone’s trade policy. But what Europe must do to be effective is to deregulate some. The regulatory burden that European governments impose on their companies is a real impediment to reshoring. Europe has become too intrusive in the business community.

Trump has also said he will require his cabinet members to cancel an even higher ratio of existing regulations relative to any new ones they implement—higher than what we had the first time. The first time, you were required to cancel two for each one you put in. He may be pushing for as many as eight, but certainly more than two. That’s one thing.

Tax policy is the other thing. You have to look at Trump’s trade activities in the context of what he is doing overall. Between deregulation and reducing corporate taxes, he’s changing the economic attractiveness of being in the U.S. regardless of tariffs. And then when you load on top of that, a bit sturdier tariff policy, you have a combination of factors that will prove very powerful.

GF: Which means that you also think this will be the outcome of the current situation?

Ross: Okay, well, there will naturally be a lag. You can’t build a new facility of any size in 10 minutes. There may be some near-term dislocation as we face higher tariffs, but we don’t yet have the increased production to offset them.

Now, that’s not a universal problem. Many of our industries operate at only 70–80 percent capacity. Therefore, not only will they be able to meet increased demand, but this will also help them absorb part of the tariff on imported components. When production increases from 70 or 80 percent capacity, the marginal costs are very small. You’ll have that factor and probably another factor—currency readjustment. How that plays out will have an important impact on how well industries do globally in each area.

To that end, if U.S. Federal Reserve Chairman Jerome Powell is slow to reduce interest rates while Europe moves at a faster pace, that will clearly have implications for currencies.

One of my concerns for Europe is that if they lower interest rates too quickly relative to the U.S., it could have real impacts on their currency. That would hurt imports but help exports. If I were a European manager, I would be more eagle-eyed than ever about the outlook for currency fluctuations.

GF: Looking at the various industry sectors, are there sectors that deserve tariffs? Are there also sectors that should not see tariffs in these negotiations?

Ross: Well, I have focused more on those who might need it than those who might not. However, pharmaceuticals are a big import to the U.S. Since U.S. drug prices are already higher than others, I don’t think hefty tariffs on pharmaceuticals would be particularly well-fitting to our economy.

But they’re going in on the really big item—the automobile. Automobile manufacturing has caused a fair degree of factory expansion here and in Mexico. In the automotive industry, you must look at the U.S. and Mexico combined because of the concept of rules of origin. In those areas, it’s inevitable. So, I think you’re right—it will vary somewhat by industry. But for the most part, most manufacturing businesses probably don’t expect there will be more tariff burdens.

GF: Would large U.S. exporters, such as technology manufacturers, be affected negatively by this?

Ross: Well, Europe doesn’t have the technological content we have so far. The giant companies in Europe are not comparable to what we call “The Magnificent Seven” over here. Europe’s response seems to have been antitrust and tax complaints, trying to hold back American companies rather than doing things that would effectively build up a European champion.

GF: What of those U.S. industry sectors geared more toward exports? Are they at risk because of tariff reciprocity in the near term?

Ross: Well, apparel is a significant import from Asian countries, and it wouldn’t surprise me if that were to continue. Some of those brands, such as the European brand Zara, have become very, very powerful players in the US. It’s a Spanish company, but it mainly produces its material in Turkey. Meanwhile, Vietnam and Mexico have become big competitors in what we used to call sneakers. So, some things will remain there that will not be affected by the tariffs.

But remember, the real purpose of the tariffs—and one that I hope will be achieved long term—is to let the rest of the world know exactly what they must do to bring our tariffs down, namely, to bring down their own tariffs. The unexpected result of the new US tariff policy could very well be lower tariffs in the long term.

Take India, for example. India’s tariffs are extremely high on most products. Prime Minister Narendra Modi wants to industrialize India. It’ is a logical place to be competitive with China if they can meet their infrastructure needs, because Indians have very good quality manufacturing skills, technological skills, and engineering skills. They have a large population base, so there’s no reason they can’t compete. What’s been holding them back has been the need for more roads and railroads. You need things like that in the way of transportation infrastructure to be much more highly developed for India to flourish. There’s a good chance that PM Modi will do that.

Vietnam has already benefited greatly from the pressures being put on China, which will probably continue. However, Vietnam has a much smaller economy and population base, so it can’t remotely replace China.

Read Part 1 of Global Finance‘s interview with Wilbur Ross:

Updated on March 17th, 2025 by Bob Ciura

The appeal of growth stocks is that they have the potential for huge returns. Consider the massive rally by Tesla, Inc. (TSLA); in the past five years, the stock has generated total returns over 500%.

That’s a lifetime of returns for some investors; Tesla has done this in a relatively short period of time.

The downside of growth stocks is that volatility can work both ways. Also, growth stocks can generate strong returns but also carry the burden of high expectations due to their sky-high valuations.

Right now, Tesla does not pay a dividend to shareholders. As a result, we believe income investors looking for lower volatility should consider high-quality dividend growth stocks.

The Dividend Aristocrats are a group of 69 stocks in the S&P 500 Index with 25+ consecutive years of dividend growth.

You can download an Excel spreadsheet of all 69 Dividend Aristocrats (with metrics that matter, such as dividend yield and P/E ratios) by clicking the link below:

 

Over time, any company – even Tesla – could make the decision to start paying dividends to shareholders if it becomes sufficiently profitable.

In the past decade, other technology companies, such as Apple, Inc. (AAPL) and Cisco Systems (CSCO), have initiated quarterly dividends.

These were once rapidly growing stocks that matured, and Tesla could follow the same way one day.

However, the ability of a company to pay a dividend depends on its business model, growth prospects, and financial position.

Even with Tesla’s huge run-up in share price, whether a company can pay a dividend depends on the underlying fundamentals.

While many growth stocks have made the transition to dividend stocks in recent years, it is doubtful that Tesla will join the ranks of dividend-paying stocks any time soon.

Business Overview

Tesla was founded in 2003 by Martin Eberhard and Marc Tarpenning. The company started out as a fledgling electric car maker, but has grown at an extremely high rate in the past several years.

Tesla’s current market capitalization is above $800 billion, making it a mega-cap stock.

Amazingly, Tesla’s current market capitalization is more than nine times the combined market caps of auto industry peers Ford Motor (F) and General Motors (GM).

Tesla has a growing lineup of different models and price points and is looking into expanding that lineup further to become a full-line automaker.

Since going public in 2010 at a split-adjusted price of $1.13 per share, Tesla has produced almost unbelievable returns for shareholders in hopes of massive future growth, as well as tremendous growth that has already been achieved.

Since then, it has grown into the leader in electric vehicles and business operations in renewable energy. Tesla produced about $97.69 billion in revenue in 2024.

In January, the company reported fourth-quarter revenue of $25.71 billion, which missed analyst estimates by $1.42 billion. Adjusted earnings-per-share of $0.73 missed estimates by $0.04 per share.

Total revenue increased 2% year-over-year for the fourth quarter, while adjusted EPS rose 3% year-over-year. Gross margin of 16.3% contracted by 138 basis points from the same quarter the previous year.

For 2024, revenue increased 1% while adjusted EPS declined 22% from 2023 levels.

Growth Prospects

Tesla’s primary growth catalyst is to expand sales of its core product line, and generate growth from new vehicles. The company’s S/X platform, which gave it the first bout of solid growth, but Tesla is now focused on ramping up its 3/Y platform.

Indeed, the 3/Y platform accounted for ~95% of all deliveries last quarter.

In addition, Tesla is continuing to develop new models, with a pickup truck, a semi-truck, and even a cheaper, more attainable model than the 3.

The company has begun delivering its semi-truck as production of that new vehicle begins to ramp up. It will be some time before that’s a meaningful source of revenue, but it’s a totally new product line that could boost revenue growth.

Tesla is also ramping up vehicle production. It now operates “Gigafactories” in Nevada, New York, Texas, Germany, and China, with more to come to support rising demand.

Tesla’s competitive advantage stems mainly from its best-in-class software and other technologies, including full self-driving mode.

Source: Investor Update

Tesla’s revenue growth has been very strong in the recent past. It grew revenue at an annual rate of 25% in the four-year period from 2020-2024.

That level of growth is difficult to find, which is why Tesla’s shares have performed so well.

Whether Tesla can continue to maintain its high growth rate is another question.

Such a strong growth rate bodes well for the company’s future potential. Some investors may view the guidance of Tesla as too aggressive, but we note that electric vehicle sales are growing at a high rate.

Electric vehicles are the clear path forward for automobiles, and Tesla is the leader in the space.

In addition, more than any other automaker, Tesla has delivered outstanding growth year after year. With an expanding product line, we believe the growth outlook for the company is bright.

Will Tesla Pay A Dividend?

Tesla has experienced rapid growth of shipment volumes and revenue in the past several years. But ultimately, a company’s ability to pay dividends to shareholders also requires sustained earnings growth.

While Tesla has been the epitome of a growth stock through its top-line growth and huge share price gains, its profitability is still small in relation to its market cap. TSLA stock is currently trading at more than 130 times its expected 2025 EPS of $2.56.

Without reaching consistent profitability, a company cannot pay dividends to its shareholders.

Tesla lost money since it became publicly traded back in 2010, up until 2020. It goes without saying that a money-losing company needs to raise capital to continue to fund operations.

To that end, Tesla has sold shares and issued debt to cover losses and fund expansion in recent years, both of which make paying a dividend even more difficult.

However, since 2020, Tesla has rapidly expanded its profitability and produced just over $7 billion in GAAP net income in 2024. The company also generates positive free cash flow, making it easier to service its debt obligations and avoid future dilutive share issuances.

Furthermore, the company does not pay any net interest expense, as its interest income exceeds its interest expense.

We see the improvement in profitability and free cash flow, as well as the improved balance sheet, as supportive of the company’s ability to eventually pay a dividend.

However, Tesla is still very much in high-growth mode, and we expect any dividend that may be paid to be many years away. In other words, it is much more profitable for Tesla to reinvest its earnings in its business than to distribute it to shareholders.

Even if Tesla decided to initiate a dividend, it would likely be very low.

For instance, if Tesla were to distribute 30% of its expected 2025 EPS in the form of dividends (a standard payout ratio for growth stocks that pay dividends), the stock would only yield ~0.2%.

Such a yield will be immaterial for the shareholders, but the dividend would deprive the company of cash that could be utilized for higher-return growth projects.

Tesla’s Stock Dividend

Tesla’s CEO, Elon Musk, said in early 2022, that he wants Tesla to “increase in the number of authorized shares of common stock … in order to enable a stock split of the Company’s common stock in the form of a stock dividend.”

Essentially, a stock dividend is where a company splits its stock, and the impact on shareholders is that the company’s value doesn’t change, but the share price is lower because there are more outstanding shares.

Indeed, Tesla implemented a 3-for-1 split on its stock, which came into force on August 25th, 2022. As a result, its outstanding share count rose from 1.155 billion to 3.465 billion post-stock dividends, and the stock price adjusted from about $900 before the split to about $300.

A stock dividend is not necessarily a material event for shareholders because their relative stake in the company remains the same; they have more shares at a lower price.

However, investors tend to view stock dividends and splits as bullish events; thus, stock dividends can trigger rallies in the share price.

Final Thoughts

Tesla is one of the premier growth stocks in the stock market. Shareholders who had the foresight to buy Tesla in its early years have been rewarded with enormous returns through a soaring share price.

However, investors looking for dividends and safety over the long run should probably continue to take a pass on Tesla stock. The company seems committed to using all the cash flow at its disposal to improve its operations’ profitability and invest in growth initiatives.

While there is always a possibility that Tesla’s massive share price rally could regain steam, it is also possible that the stock could fall. Investors should remember that volatility can work both ways.

More defensive investors, such as retirees, who are primarily concerned with protecting principal and dividend income, should instead focus on high-quality dividend growth stocks, such as the Dividend Aristocrats.

It is unlikely that Tesla will ever pay a dividend, or at least not for many years.

If you are interested in finding more high-quality dividend growth stocks suitable for long-term investment, the following Sure Dividend databases will be useful:

The major domestic stock market indices are another solid resource for finding investment ideas. Sure Dividend compiles the following stock market databases and updates them monthly:

The designs for the 2026-, 2027-, and 2028-dated American Platinum Eagles in proof finish appear to be finalized. These three coins will be part of the United States Mint’s upcoming “Charters of Freedom” series, inspired by the Declaration of Independence, the U.S. Constitution, and the Bill of Rights.

Proof American Platinum Eagles debuted in 1997 and have undergone multiple theme and design changes. Each coin is struck from 1 ounce of 99.95% fine platinum at the U.S. Mint’s West Point facility and carries a $100 face value – the highest denomination for any U.S. legal tender coin.

Since 2018, proof American Platinum Eagles have featured a common reverse design of an eagle in flight carrying an olive branch, while the obverse has showcased unique, annually changing designs. The Charters of Freedom series will continue this tradition with new obverse designs representing foundational American documents.

Last October, the U.S. Mint presented candidate designs for the series to the Citizens Coinage Advisory Committee (CCAC) and the Commission of Fine Arts (CFA). Out of three design sets proposed, both committees recommended Set 01.

A design was selected for the 2026-dated platinum coin, while slight modifications were suggested for the 2027 and 2028 designs to enhance the set’s cohesiveness. These refinements included standardizing the sun’s rays across all years to match the 2026 design, adjusting the tree in the 2027 design to appear younger and still developing, and modifying the child in the 2028 design to differentiate it from previous Mint coins featuring children. The CFA also identified misaligned date placements on the 2027 and 2028 designs, requiring correction. Additionally, a CCAC member suggested adding a 14th star to the 2028 Bill of Rights design to accurately reflect the number of states at its ratification, a recommendation the CFA also supported.

In February, both panels reviewed the U.S. Mint’s revisions and formally approved the updated designs, as detailed above and below.

Along with additional images, the following are the U.S. Mint’s official design descriptions for the selected designs.

SET 01 employs the symbolism of Nature to chronicle America’s journey through its founding documents. Through a carefully crafted progression of environmental motifs, it traces the transformational impact of each charter, together illustrating a living embodiment of our American democracy. (Image shown above.)

PTP-01-D-01A depicts sun rays beginning to emerge through storm clouds, representing the dawn of a new nation arising from the turmoil of revolution, as well as the Enlightenment ideas that influenced the Declaration of Independence. A quill symbolizing the Declaration sweeps over the landscape, marking the nation’s founding and the power of revolutionary ideas to 2 catalyze change. This design features 13 stars representing the original 13 colonies in the border. The additional inscription is “DECLARATION OF INDEPENDENCE.”

PTP-01-C-01 shows the storm clouds receding and the sunlight growing stronger, marking the nation’s transition to self-governance. In place of the quill, a young tree has taken root, representing the U.S. Constitution as a living framework in this American landscape. Its form echoes the shape of the quill, a visual reminder that this new system of government is informed by and built upon the values and ideals set forth in the Declaration of Independence. Thirteen stars representing the 13 colonies frame the scene. The additional inscription is “UNITED STATES CONSTITUTION.”

PTP-01-B-01 reveals a maturing tree, its canopy offering shelter and protection – a powerful metaphor for the rights and freedoms guaranteed to citizens in the Bill of Rights. Beneath it, a child gazes forward, representing the people whose rights are safeguarded now and the protection provided to future generations. The scene is now fully illuminated by sunlight, suggesting the powerful influence of these founding documents on our nation. Fourteen stars reflecting the number of states at ratification encircle the design. The additional inscription is “BILL OF RIGHTS.”

Novo Nordisk (NVO) shares rose Monday as the company said it would present new data on the ability of semaglutide, the active ingredient in its weight-loss drugs Ozempic and Wegovy, to lower heart risks.

The Danish drug developer is slated to take part in the American College of Cardiology Scientific Session and Expo, which runs March 29 to 31. Its presentations “will provide new information about semaglutide medicines to reduce cardiovascular risk,” focusing on conditions including type 2 diabetes, obesity, peripheral arterial disease, and chronic kidney disease. 

Shares of Novo Nordisk were up more than 3% in intraday trading Monday, recovering some of the stock’s losses last week following disappointing results from a phase 3 trial of its in-development weight loss drug CagriSema. Novo reported the average weight loss among patients taking the drug was 15.7% of their body weight after 68 weeks, whereas the drugmaker had reportedly been aiming for 25%. 

Despite Monday’s gains, shares of Novo Nordisk are down about 7% for the year so far, and have lost 40% of their value in the past 12 months.

During these busy times, it pays to stay on top of the latest profit opportunities. And today’s blog post should be a great place to start. After taking a close look at the latest data on institutional buying pressure and each company’s fundamental health, I decided to revise my Stock Grader recommendations for 133 big blue chips. Chances are that you have at least one of these stocks in your portfolio, so you may want to give this list a skim and act accordingly.

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Article printed from InvestorPlace Media, https://investorplace.com/market360/2025/03/20250317-blue-chip-upgrades-downgrades/.

©2025 InvestorPlace Media, LLC

Written by the Market Insights Team

Contrasting trade war tactics

Kevin Ford – FX & Macro Strategist

Last week, the Mexican peso traded below the 20 level for the first time since November. Mexican President Claudia Sheinbaum chose to continue negotiations with the Trump administration rather than retaliate with tariff hikes against the U.S., delaying any response to U.S. tariffs on steel and aluminum imports. Commerce Secretary Howard Lutnick commended the Mexican President for avoiding tit-for-tat tariff escalations, contrasting this approach with that of the Canadian government. The Mexican peso has gained 4.8% against the USD year-to-date, approaching the 200-day SMA as net short positions unwind.

In contrast, the Loonie has remained flat against the USD year-to-date. Following a tariff-driven 25 bps rate cut by the Bank of Canada, the central bank expressed concerns about an impending crisis, not only due to steel and aluminum tariffs but also because of Canadian countermeasures. Also, as noticed by B.C. Premier David Eby, Canada may not afford to be caught in a trade war with both the United States and China—its two largest trading partners.

Because of this, bearish positioning against the USD/CAD remains historically short.

The USD/CAD reached a high of 1.4521 and a low of 1.434 last week, with significant intraday swings highlighting strong resistance above 1.45 and no signs of easing below 1.43. The Loonie remains above the 20-, 40-, and 60-day SMAs, while implied volatility has dropped significantly. April 2^nd will be a key date to assess the broader trajectory of U.S. trade policy and its impact on the Canadian economy. President Trump’s advisors have distinguished between tactical tariffs, used as negotiation tools, and structural tariffs, such as the reciprocal tariffs set to be unveiled in early April, aimed at reshaping U.S. trade policy long-term.

Central bank actions will take center stage this week. After 100 bps of rate cuts in late 2024, the Fed is expected to keep rates unchanged for a second consecutive meeting on Wednesday. On Thursday, the Bank of England is also expected to hold rates steady at 4.5%, while Sweden’s Riksbank is anticipated to maintain rates at 2.25%.

Stocks rebound despite stagflation signs

Boris Kovacevic – Global Macro Strategist

Markets ended the week on a volatile but positive note as investors weighed weaker consumer sentiment versus the lack of news on the tariff front against each other. Despite rebounding initially on Friday, the US dollar remains in a clear downtrend, with investors questioning the long-term effects of tariffs. The University of Michigan survey revealed a sharp drop in US consumer sentiment to a more than two-year low in March. Despite this slowdown and weaker subjective employment prospects, inflation expectations jumped to 4.9% from 4.3%, reflecting growing concerns over President Trump’s incoming tariff plans. This stagflationary mix—weakening growth but rising price expectations—adds to uncertainty in the economic outlook.

US equities ended another week in negative territory, with the S&P 500 plunging 10% in just 16 sessions before staging a Friday rebound. Credit markets echoed growth fears, as junk bond spreads widened. The US dollar is now down about 6% from its January peak and is on track for its worst post-inauguration performance since Nixon’s second term in 1973. Investors are assessing the impact of tariffs, which could support the currency through safe-haven demand but also weigh on sentiment and economic growth, limiting the potential of a recovery.

The upcoming week will feature the Fed’s rate decision, where policymakers are expected to stay on hold. With no immediate rate move anticipated, attention will shift to the Fed’s projections and Powell’s press conference for clues on future policy direction. With rising trade tensions, a weakening labor market, and shifting Fed expectations, volatility is likely to remain elevated heading into the new week. Investors will be closely watching upcoming inflation data, Fed speak, and trade policy developments to gauge the direction of the US economy and the dollar’s next move.

Establishing a higher bottom?

Boris Kovacevic – Global Macro Strategist

The euro extended its gains on Friday, rallying against major peers as a breakthrough in German fiscal policy negotiations lifted sentiment. The deal, which includes sweeping borrowing rule changes and a €500 billion infrastructure fund, is seen as a potential boost to Germany’s economy and broader Eurozone growth. The next Chancellor Friedrich Merz secured the Greens’ backing for the fiscal package, clearing a major political hurdle. The agreement is expected to pass through the outgoing parliament this week.

The common currency has now posted a second straight week of gains against the dollar, pound, and franc. The fiscal revival in Germany could continue to be a tailwind for the euro. However, it will need to be followed by improving sentiment and hard data along the way to secure its potential for another leg higher.

Industrial production actually beat expectations in January, rising by 2% on the month, and reversing a 1.5% fall from the month prior. Wholesale prices rose as well and are now displaying growth rate that is well in positive territory. Markets are still questioning the resolve of the ECB to cut interest rates aggressively this year. The German fiscal package, rising goods and food inflation and tariff risks will be weighted against rapidly falling wage expectations and services inflation.

EUR/USD has been range-bound for about two years now, fluctuating between $1.02 and $1.12 since January 2023. A stabilization around the $1.07 – $1.08 level would be a good sign that we are making higher lows, which could set the pair up for another leg higher. However, this would need to be accompanied by stronger European data or increasing recession risks in the US. For now, markets are watching out for sentiment data and the upcoming Fed meeting.

Resilient sterling awaits BoE decision

George Vessey – Lead FX & Macro Strategist

Despite the downwardly revised UK GDP outlook following a bout of weaker data and ongoing tariff uncertainty, the British pound is holding up relatively firm against its major peers. GBP/USD remains above its 5-year average rate of $1.29, whilst GBP/EUR lingers close to €1.19 – which appears fair value based on real rate differentials. Signs of a rebound in UK inflation likely outweigh the cooling in economic activity, meaning we expect the Bank of England (BoE) to keep rates unchanged this week.

As a risk-sensitive currency, we think the pound is vulnerable to a deeper correction in equity markets, but it’s also likely to be supported by a rebound in risk appetite if Russia-Ukraine ceasefire talks gain traction. No news is also good news when it comes to Trump’s tariff threats, and sterling could be primed for a test of the $1.30 handle depending on whether the euro accelerates higher towards $1.10 versus the US dollar, due to the strong positive correlation between GBP/USD and EUR/USD. All eyes are also on the BoE’s meeting this week though. We expect the BoE to hold Bank Rate at 4.5% on Thursday, stressing heightened uncertainty and data evolving broadly as it expected since February. Markets have not ramped up expectations for BoE easing as much as for the Fed, hence the elevated UK-US yield spread adds to GBP/USD’s constructive backdrop.

The cut-hold tempo by the BoE has become well established and renewed concerns about supply weakness mean it’s very unlikely there will be more than two or three votes for back-to-back rate cuts. Although Catherine Mann, the arch-hawk-turned-dove, may have caught all the headlines last month with her vote for a 50bp rate cut, UK wage growth is at 6%, and services inflation is at 5%, meaning the rest of the committee will likely want to tread cautiously when it comes to cutting.

Safe havens yen and franc on backfoot

Table: 7-day currency trends and trading ranges

Key global risk events

Calendar: March 17-21

All times are in ET

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Chinese tech giant Baidu (BIDU) said it has launched two artificial intelligence (AI) models, including the ERNIE X1, which it claims delivers the same performance as DeepSeek R1 “at only half the price.”

Baidu said in a statement Sunday that it had released ERNIE 4.5—its native multimodal foundation model—and ERNIE X1, the “deep-thinking reasoning model with multimodal capabilities” that the company says rivals DeepSeek’s super-efficient open-source AI model. Both models, the Chinese company said, are free for individual users of its chatbot.

ERNIE X1, Baidu said, “possesses enhanced capabilities in understanding, planning, reflection, and evolution.” The deep-thinking reasoning model, Baidu said, excels in areas including dialogue, logical reasoning and complex calculations.

DeepSeek threw markets in disarray earlier this year when the Chinese startup released its own open-source AI model that performed as well as OpenAI’s ChatGPT and were built at a fraction of the cost using less advanced chips. 

Baidu’s U.S.-listed shares are up around 1% in premarket trading Monday and have lost almost 10% of their value in the 12 months through Friday.

Looking beyond its home market in Egypt, Commercial International Bank’s (CIB’s) Islam Zekry, group chief finance and operations officer, reveals the bank’s vision to be a key financial partner for African economic expansion. To do this, it is leveraging Kenya as a strategic hub, while prioritising high-growth sectors and supporting SMEs, corporates and Egyptian exporters.

Global Finance (GF): What are CIB’s growth plans for 2025 and beyond across Africa? How will you achieve these?

Islam Zekry (IZ): CIB’s strategy is centered on expanding our footprint in East Africa by leveraging our expertise in corporate, SME and retail banking. Using Kenya as a regional hub, we will extend our reach into other key African markets that have strong trade ties with Egypt.

This growth plan is built on three key pillars: firstly, enhancing accessibility and cost efficiency through mobile and online banking solutions; secondly, leveraging the African Continental Free Trade Area (AfCFTA) to facilitate seamless cross-border transactions; and thirdly, supporting green projects and financial inclusion initiatives to foster long-term economic growth.

With this approach, we aim to deliver tailored financial solutions, enhance the customer experience and drive sustainable growth in Africa’s evolving banking landscape.

GF: Which markets and sectors are the priority for growth?

IZ: By focusing on markets aligned with Egypt’s trade interests and that show economic potential, we are prioritising SME and retail banking, trade finance, digital financial services, sustainable finance, high net worth individuals (HNWIs) and institutional banking.

Within the SME and retail banking sectors, we are supporting Africa’s growing entrepreneurial ecosystem via tailored financial products. Further, by expanding our digital financial services we can enhance financial inclusion.

We also strive to integrate ESG and sustainable finance solutions into our operations to cater to the environment and society. For example, we have invested in energy, agriculture and infrastructure to drive economic resilience.

In addition, to better serve HNWIs and institutional banking customers, we have diversified corporate lending into emerging industries.

GF: What is driving CIB’s expansion strategy?

IZ: We have seen a significant increase in the demand for financial services that support intra-African trade through economic integration.

The tailored financial solutions we offer in Kenya are a good example. These enable us to help businesses bridge trade gaps between Egypt and other African countries, while also looking to diversify our offerings and mitigate market risks to capitalise on Africa’s economic potential.

In parallel with this, CIB’s expertise in trade finance has positioned us as a key facilitator of trade between Egypt and Kenya, supporting import and export activities, supply chain finance and cross-border transactions.

We have also developed a five-year financial inclusion strategy to provide vulnerable segments with easy access to financial services using digital solutions.

GF: How does the bank’s expansion path serve as a gateway to future growth in Africa?

IZ: Kenya has several strategic advantages that enable it to be a regional financial hub and critical trade corridor between Egypt and the broader East African region.

We have already capitalised on Kenya’s leadership in digital and SME banking by providing a scalable model for financial inclusion across Africa. Further, Kenya’s enhanced trade finance and corporate banking expertise supports cross-border transactions and strengthens economic ties.

In short, by refining our approach in Kenya, we are creating a blueprint for sustainable growth across Africa.

GF: How will CIB’s client offerings enable it to succeed in efforts to expand regionally?

IZ: CIB’s growth strategy is designed to cater to a diverse range of clients through tailored financial services for SMEs, corporate and retail customers, and institutional investors. This makes us well-positioned to drive meaningful financial growth and inclusion across Africa.

For SMEs, we help them scale efficiently by providing specialised financing, digital banking tools and trade facilitation services. For corporate clients, we have comprehensive trade finance and cash management solutions to streamline transactions across African markets. And for retail customers – including the unbanked population – we offer access to the bank’s digital-centric financial products.

Meanwhile, to attract global institutional investors, we are growing our corporate lending portfolio and creating sustainable finance initiatives.

GF: How will CIB position itself as a key partner for Egyptian exporters expanding into African markets?

IZ: To empower Egyptian exporters looking to expand across Africa, we provide an array of services. Our trade finance solutions range from letters of credit to structured lending to cross-border transaction support. We also run dedicated financing programmes aimed at strengthening Kenyan-Egypt trade ties through specialised funding options for exporters.

In addition, we deliver Africa business desk services to assist key industries such as textiles, consumer durables and construction. Combined with our business forums and trade delegations, we connect Egyptian companies with new opportunities across the continent.

Ultimately, our products and services align with our strategic investments, innovative banking solutions and cross-border partnerships, with the goal to shape the future of banking across Africa, one market at a time.

Gold (XAUUSD) is set to remain in the spotlight to start the week after setting a new record high Friday above the closely watched $3,000/oz level.

The precious metal received a boost last week as investors flocked to the safe-haven asset amid concerns that the Trump administration’s unpredictable tariff policies could slow economic growth and accelerate inflation.

Gold gained 2.6% last week and has jumped 14% since the start of the year as of Friday’s close. By comparison, the S&P 500 stock index has fallen about 8% from its record high set less than four weeks ago amid the political and economic uncertainty.

Below, we take a closer look at gold’s chart and apply technical analysis to point out crucial price levels that investors may be watching.

Pennant Pattern Breakout

Gold consolidated within a two-week pennant before breaking out above the pattern’s top trendline last Thursday, signaling a continuation of the commodity’s longer-term uptrend.

Moreover, the relative strength index (RSI) confirms bullish price momentum with a reading above 50, though a push this week into overbought territory could increase the likelihood of near-term profit-taking.

Let’s turn to gold’s chart to forecast how a continuation move may play out and also identify several crucial support levels worth monitoring during potential pullbacks.

Bars Pattern Analysis

To forecast how a continuation move higher in the commodity might look, investors can use bars pattern analysis, a technique that analyzes prior trends to make future price projections.

When applying the analysis to gold’s chart, we take the price bars comprising the asset’s uptrend from August to October last year and overlay them from last Thursday’s breakout point. This forecasts an upside target of around $3,365 an ounce, around 13% above Friday’s closing price. 

The prior trending move, which commenced following a breakout from an earlier pennant pattern on the chart, played out over 57 trading days, indicating a similar move higher could last until early June this year if price action rhymes.

Crucial Support Levels to Monitor

Profit-taking in the commodity could see gold’s price initially revisit the $2,833 level. This area on the chart may provide support near the pennant pattern’s lower trendline and the upward sloping 50-day moving average.

The next lower level to monitor sits around $2,790. A pullback to this location could be met with buying interest from investors seeking entry points near the yellow metal’s prominent late-October swing high.

Finally, a deeper retracement could lead to a retest of lower support at the $2,721 level. This region, positioned about 9% below the commodity’s Friday close, may attract bids near two closely aligned peaks that formed on the chart in November and December last year.

The comments, opinions, and analyses expressed on Investopedia are for informational purposes only. Read our warranty and liability disclaimer for more info.

As of the date this article was written, the author does not own any of the above securities.