Mastercard is the second-largest payment processor in the world, having processed close to over $9 trillion in volume during 2023. Mastercard operates in over 200 countries and processes transactions in over 150 currencies.

The Federal Reserve wrapped up its latest Open Market Committee meeting yesterday and, as expected, held the federal funds rate steady at 5.25%-5.50%. The rate remains at its highest level since 2000 and is above the long-term average of 4.4%. This is the Fed's plan: keep rates high to push inflation lower. In the meantime, inflation has indeed been on a downward trek. The latest CPI reading was 3.3%, down from 9.1% in July 2022, and the latest core PCE Price Index reading (the Fed's favorite metric) was 2.8%. Yet despite progress, both measures are still well above the Fed's target of 2.0%, and the slope of the downward trajectory has flattened lately. Those are potential problems for a central bank that watched while inflation got out of hand in 2020-2021 and wants to rebuild its reputation as an effective inflation fighter. Here are our key takeaways from the Fed meeting, the follow-up press conference, and the release of the central bank's Summary Economic Projections, commonly referred to as "the dot plot." 1) The median projection for federal funds rate cuts this year is now one, versus the prior forecast for three -- a big move in a hawkish direction. 2) The Fed appears to be trying to balance the positive impact of a restrictive policy on inflation versus the negative impact on low- and moderate-income earners. 3) The shelter component of the inflation readings remains the major problem, though the rate of shelter price increases has slowed. We still think that two cuts is the right number for the Federal Reserve in 2024 and then two more in 2025. We reckon the central bank wants to cut rates in order to save face after previous projections and also get one cut in prior to the presidential election.

Our rating on the Financial sector is Over-Weight. The Fed's rate-hike campaign is expanding net interest margins for banks. We also look for recovery in fee-based businesses, bond issuance, and M&A as the rate cycle winds down. Still, with inflation running hot, companies may cut back on hiring and investments, and thus on business loans. As of the end of April, the sector accounted for 13% of the S&P 500. The sector was outperforming the market with a gain of 12.0%. It underperformed the market in 2023, with a gain of 7% compared to a gain of 24% for the S&P 500. The sector includes money center banks, regional banks, investment banks and brokerages, exchanges, insurers, and financial data companies. Here are the Financial companies that either are on our Focus List or are used in our model portfolios.

Sustainable Impact Investing, or ESG investing, is gaining traction not only with Argus Research clients but also with the global investment community. BlackRock CEO Lawrence Fink, who oversees approximately $9 trillion in assets, announced in January 2020 that his firm would be investing in companies that are making progress on sustainability. He doubled down in his January 2021 letter, calling on company managements to disclose their plans for making their businesses "compatible with a net-zero economy" by 2050. As assets have flowed in over the past 40 years, Sustainable Impact Investing has evolved. The discipline, originally known as Socially Responsible Investing, focused at first on excluding companies that conducted business in South Africa, or participated in industries such as tobacco, alcohol, and firearms. Performance of these initial strategies lagged, and the approach has been modified. Now, instead of merely identifying industries to avoid, the discipline promotes "sustainable" business practices across all industries that can have an "impact" on global issues such as climate, hunger, poverty, disease, shelter, and workers' rights.