After a Rapid Recovery, Stock Selection is Very Important

Excerpt from Louis Navellier's Marketmail - 3/19/2019

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The S&P 500 has now risen 20% since its Christmas Eve low and the VIX (volatility index) is now at its lowest level since early October, when the stock market peaked, and ETF arbitrage spun out of control. 

The Wall Street Journal had an interesting article last week entitled, “Riskier Stocks Are Paying Off.” The article concluded that companies with weaker earnings are outperforming those with steadier profits. If you have any questions about your stocks, I urge you to use my Dividend Grader and Stock Grader databases, which are not experiencing the same issue, probably because my Quantitative grade measures include persistent institutional buying pressure, which sometimes transcends the traditional fundamentals. The bottom line is that the fundamentals are working, especially for stocks with high Quantitative grades.

Our friends at Bespoke Investment Group also pointed out that the smallest stocks in the S&P 500, based on market capitalization, continue to substantially outperform the overall S&P 500. This bottom 10% (50 stocks) is more domestic-oriented, less adversely impacted by a strong U.S. dollar that continues to negatively impact large multinational companies that are being hurt by a global economic slowdown.


In This Issue of Marketmail (Click Here to Read)

With the market rising again, our authors take a Spring Break with some valuable market tutorials. Bryan Perry looks at rising second-half 2019 earnings forecasts and a 5-point checklist on why the market seems so optimistic. Gary Alexander hearkens back to the roots of our crippling federal entitlement programs and the first war between the Fed and the President in the 1960s. Ivan Martchev addresses common myths about QE and the “excess reserves” vs. inflation and “printing money,” while Jason Bodner expands on his 30-year long-term indicator for overbought vs. oversold markets, using red, green, and yellow bands. Then, I’ll return to present-day events with an analysis of Brexit and the latest U.S. economic indicators.

Income Mail: Earnings Pendulum Expected to Swing Higher 

     By Bryan Perry

Making a Second-Half Global Rebound Checklist

Growth Mail: When Presidents and Fed Chairs REALLY Went to War

     By Gary Alexander

“How Are We Ever Going to SPEND All This Money?”

Global Mail: The Mystery of the Credit Multiplier

     By Ivan Martchev

How the Fed Increases Liquidity Without Fueling Inflation

Sector Spotlight: The S&P 500 in 2019 is Like a 20-to-1 Longshot that Paid Off

     By Jason Bodner

What the Red, Green, and Yellow Bands Tell Us

A Look Ahead: 10 Days Until Brexit Explodes into “No Deal” No Man’s Land

     By Louis Navellier

Fed Chairman Powell Has Learned to “Watch His Language”

Are We About To Enter an "Earnings Recession"?

Excerpt from Louis Navellier's Marketmail - 3/12/2019

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The bulk of fourth-quarter earnings have been announced and the average stock has posted a 5.7% sales increase and a 14.3% earnings increase – the fifth straight quarter of double-digit earnings growth.

Despite that great news, the S&P fell 2.16% last week as CNBC kept warning about a coming “earnings recession.” They are referring to the analyst community’s forecast that first-quarter 2019 S&P 500 earnings could decline 2.9%, due largely to more difficult year-over-year comparisons. Specifically, FactSet is expecting that only four of the 11 S&P sectors will post positive earnings growth in the first quarter, namely Healthcare (up 5.4%), Utilities (+3.9%), Industrials (+3.1%), and Real Estate (+1.9%). 

However, 2018 was a year of 24% earnings growth and a 6% decline in the S&P 500, so a year of flat earnings may not impact the market that much. Maybe the late 2018 correction reflected the anticipated drop in 2019 earnings growth, so the market may now look forward to 2020 earnings more than 2019.


In This Issue of Marketmail (Click Here to Read)

We finally had a down week in 2019, so the doomsday stories have dominated the media. First, there’s the very real threat of Brexit and a European recession, but Bryan Perry doesn’t think this will impact the U.S. market much. Then there’s the political nonsense of the Green New Deal and the latest “end of the world” rhetoric in America, which Gary Alexander debunks. Ivan Martchev revisits the China “miracle” of a levitating market with deteriorating fundamentals, which can’t go on forever. Jason Bodner has been warning of a correction in this “overbought” market and is glad it has arrived, but history tells him to look for higher prices ahead. Then I’ll close with a look at the U.S. vs. Europe. Bottom line, there are problems in Europe and China, but the U.S. remains the oasis – with a strong currency, stock market, and economy.


Income Mail: Recession Inertia is Building in Europe 

     By Bryan Perry

European Growth Forecast – “Look Out Below!”

Growth Mail: The Sky is Falling…Again

     By Gary Alexander

Is Today Really “The Most Divided” America Has Ever Been?

Global Mail: The Trade Deal is a Trigger to Sell China 

     By Ivan Martchev

The Economic Cycle Cannot Be Eliminated

Sector Spotlight: This “Overbought” Market Finally Corrected

     By Jason Bodner

The First Week of Lower Prices in Most Sectors in 2019 

A Look Ahead: Can We Sustain 3% GDP Growth in 2019?

     By Louis Navellier

In Contrast, Europe is Struggling

Louie Navellier Update - March 9, 2019

Hi Everybody,

The bulk of the S&P 500’s fourth quarter results have been announced and the average stock has posted a 5.7% annual sales increase and a 14.3% annual earnings increase.  This represents the fifth quarter in a row of double-digit earnings growth for the S&P 500.
 
In the meantime, CNBC keeps talking about an “earnings recession,” which is starting to spook many investors.  The analyst community is now forecasting that the S&P 500’s first quarter earnings will decline at an annual pace of 2.9% due largely to more difficult year over year earnings comparisons.  FactSet is expecting that only 4 of the 11 sectors in the S&P 500 will post positive earning growth in the first quarter, lead by Healthcare (up 5.4%), Utilities (up 3.9%), Industrials (up 3.1%) and Real Estate (up 1.9%). 
 
Severe winter weather has week impacted much of the U.S. in recent weeks, so this is a good time to remind investors that first quarter GDP is frequently adversely impacted by the weather.  The Atlanta Fed is now expecting just 0.5% annual GDP growth for the first quarter, which is not too bad, since first quarter GDP is often negative when there is severe winter weather.
 
Interestingly, the final fourth quarter GDP is expected to be revised a bit lower, since on Wednesday, the Commerce Department announced that the U.S. trade deficit soared 18.8% to the highest level in a decade to $59.8 billion in December, as U.S. exports declined 1.9% to $205.1 billion, while imports rose 2.1% to $264.9 billion.  I should add that some economists believe that imports soared in December because businesses were trying to build inventories, just in case tariffs were increased.
 
Speaking of tariffs, there has been a lot talk about a favorable resolution to the U.S. and China trade spat.  Specifically, the U.S. is prepared to remove tariffs on $200 billion of Chinese goods in exchange for China lowering tariffs on U.S. auto, chemical, farm and other products.  Furthermore, China would buy $18 billion in natural gas from Cheniere Energy and would not retaliate by bringing recent U.S. tariffs in a formal complaint before the World Trade Organization.  A signing ceremony between President Trump and President Xi is expected in the next several weeks.  In the meantime, China’s exports plunged 20.7% in February compared to a year ago, which is a sign of weak global growth, so I suspect that China wants to get rid of U.S. tariffs as soon as possible to further boost its exports.
 
There was a lot of positive economic news last week.  On Tuesday, the Institute of Supply Management (ISM) announced that its non-manufacturing, service index surged to 59.7 in February, up from 56.7 in January, which was substantially above economists’ consensus estimate of 57.4.  The ISM components for new orders and business activity were especially robust at 65.2 and 64.7, respectively.  Additionally, all 18 ISM components rose in February, so this was truly a spectacular report for the ISM service index!
 
The Commerce Department on Tuesday reported that new home sales rose 3.7% in December to an annual rate of 621,000.  For all of 2018, new home sales declined by 2.4%.  Interestingly, median sales prices for new homes in December were $318,600, which is 7% lower than a year ago.  At the current annual sales pace, there is now a 6.6-month supply of new homes for sale, which is high, so median home prices may remain under pressure.  Overall, this was a very positive report for both new home sales and moderating home prices.  Now that home and rental prices are finally moderating, the Fed will be much less likely to raise key interest rates.
 
The Commerce Department announced on Friday that new housing starts surged 18.6% in January to an annual pace of 1.23 million.  Residential building permits rose a much more modest 1.4% in January to a 1.345 million annual paces.  Both new housing starts and building permits came in at a much higher pace than expected, since economists were expecting new housing starts to rise 9.5% and building permits to decline 2.7%.  Overall, it appears that the supply of housing will increase, which should further help median home prices to stabilize.
 
On Wednesday, the Fed released their Beige Book survey, where 10 of the Fed’s 12 districts saw “slight to moderate” growth, while St. Louis and Philadelphia reported “flat economic conditions.”  Interestingly, the Beige Book survey had a surprisingly somber tone and noted that six Fed districts note slower economic activity due to the partial federal government shutdown that adversely impacted auto sales, retail sales, tourism, real estate, restaurants, manufacturing and staffing services.  As a result, the Beige Book survey reported that retail sales were “mixed.”  Also interesting is that the Beige Book survey cited the higher cost of credit as a reason for weak auto sales.  Only the labor market was cited as a bright spot in the Beige Book survey.  There is no doubt that the Fed will remain “data dependent” and is not likely to raise key interest rates anytime soon.
 
The big surprise last week was that on Thursday, the European Central Bank (ECB) stunned central bank observers by unveiling plans to stimulate the Eurozone economic growth.  This was a major policy reversal, since not only did the ECB say that they would hold interest rates steady for the remainder of 2019, plus announced low cost loans to banks to help shore up their capital base.  The first batch of ECB loans will be offered in September with a two-year maturity.  The ECB slashed its 2018 GDP forecast to 1.1%, down from 1.7% back in December.  ECB President, Mario Draghi, said “The persistence of uncertainties related to geopolitical factors, the threat of protectionism and vulnerabilities in emerging markets appears to be leaving marks on economic sentiment.”  Draghi also added that the probability of a Eurozone recession was “very low,” but clearly the uncertainty surrounding Brexit on March 29th is a wild card that must be taken into consideration. 
 
On Friday, it was announced that German factory orders declined 2.6% in January, which was substantially below economists’ consensus estimate of a 0.5% increase and the biggest monthly decline since last June.  Orders outside the Eurozone were especially weak, which is consistent with China’s plunging exports.  Domestic orders also fell, so if Germany follows Italy into a recession, the ECB will have to get much more aggressive, especially since Brexit is causing so much uncertainty.
 
Here is the U.S., job growth maybe starting to slow down.  On Wednesday, ADP reported that 183,000 private payroll jobs were created in February, which was slightly better than economists’ consensus estimate of 180,000, but this was the slowest monthly pace since last November.  However, the January ADP private payroll report was revised up to an impressive 300,000, up from 213,000 previously estimated.  ADP continues to be the most reliable payroll report.
 
The Labor Department reported on Friday that 20,000 payroll jobs were created in February, which was substantially below analysts’ consensus estimate of 180,000 and the weakest report in 17 months.  Despite this disappointing payroll report, the unemployment rate plunged to 3.8% in February, down from 4% in January.  There is no doubt that the partial federal government shutdown distorted unemployment rate as well as some big snowstorms in February.  Additionally, the proportion of the workforce that was part time declined to 7.3% in February, down from 8.1% in January, as jobs in construction, mining and retail declined.  Interestingly, the December and January payroll reports were revised up to 227,000 (up from 222,000) and 311,000 (up from 304,000), so I would not be surprised if February’s payroll report is revised higher in the upcoming months.  The best news was the February payroll report average hourly earnings rose by 0.4% or 11 cents per hour to $27.66 per hour in February and have risen an impressive 3.4% in the past 12 months.
 
Interestingly, this wage growth has not been inflationary, since the U.S economy continues to boost its productivity.  Specifically, U.S. productivity in the fourth quarter rose at an annual rate of 1.9% and in the past 12 months grew at a robust 2.2% pace.  In the past decade, productivity has risen at a 1.3% annual pace, so the acceleration in productivity in the past 12 months, seems to be driven partially by increased automation due to ongoing labor shortages for skilled workers.
 
Overall, we remain in a “Goldilocks” environment with accommodative central banks and moderating interest rates due to slowly global growth and serious Brexit concerns.  There is no doubt that there is a global economic slowdown underway due to plunging Chinese exports and German factory orders, so the ECB has decided to provide new stimulus to try to avoid a Eurozone recession. 
 
The key for investors in the upcoming months will be to concentrate on dividend growth stocks as well as conservative growth stocks that are still forecasted to post strong earnings momentum in a decelerating earnings environment.  Our A-rated (Strong Buy) & B-rated (Buy) stocks in both Dividend Grader and Stock Grader are expected to remain an oasis for investors and should continue to benefit from persistent institutional buying pressure in an increasingly narrow stock market environment.  See link:

https://www.navelliergrader.com

Louie 



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SMART Portfolios - February Performance Recap

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SMART Growth Portfolios
 
    MTD YTD 1YR 3YR 5YR
All Tactical
    -7.30% -11.54% -11.54% 4.23% 3.75%
American Funds Core
    -7.11% -7.63% -7.63% 7.13% 5.71%
iShares ETF Core
    -5.31% -7.37% -7.37% 5.67% 4.58%
Oppenheimer Funds Core
    -7.04% -10.86% -10.86% 5.21% 4.00%
S&P Target Risk Index - Aggressive
    -3.78% -5.69% -5.69% 5.29% 4.21%
             
SMART Balanced Portfolios
 
    MTD YTD 1YR 3YR 5YR
All Tactical
    -4.92% -5.83% -5.83% 4.87% 3.72%
American Funds Core
    -4.04% -4.38% -4.38% 5.93% 4.86%
iShares ETF Core
    -3.34% -4.13% -4.13% 5.12% 3.95%
Oppenheimer Funds Core
    -4.49% -5.57% -5.57% 5.04% 4.00%
S&P Target Risk Index - Growth
    -2.03% -3.72% -3.72% 4.41% 3.31%
             
SMART Income Portfolios
 
    MTD YTD 1YR 3YR 5YR
All Tactical
    -1.88% -0.50% -0.50% 5.10% 3.25%
American Funds Core
    -3.06% -2.51% -2.51% 5.56% 4.13%
iShares ETF Core
    -1.96% -2.35% -2.35% 4.44% 3.32%
Oppenheimer Funds Core
    -2.04% -2.46% -2.46% 4.37% 3.30%
S&P Target Risk Index - Conservative
    -1.15% -2.73% -2.73% 3.95% 2.93%
                         

Past performance is no guarantee of future results.

©2019 Information and recommendations contained in Smart Portfolio market commentaries and writings are of a general nature and are provided solely for the use of Cavalier Investments' Smart Portfolio, its clients and prospective clients. This content is not to be reproduced, copied or made available to others without the expressed written consent of Cavalier Investments' Smart Portfolio. These materials reflect the opinion of Cavalier Investments' Smart Portfolio on the date of production and are subject to change at any time without notice. Due to various factors, including changing market conditions or tax laws, the content may no longer be reflective of current opinions or positions.

Past performance does not guarantee future results. Where data is presented that is prepared by third parties, such information will be cited, and these sources have been deemed to be reliable. However, Cavalier Investments' Smart Portfolio does not warrant the accuracy of this information. The information provided herein is for information purposes only and does not constitute financial, investment, tax or legal advice. Investment advice can be provided only after the delivery of Cavalier Investments brochure and brochure supplement (Form ADV Part 2A & B) and once a properly executed investment advisory agreement has been entered into by the client and Cavalier Investments. All investments are subject to risks. Investments in bonds and bond funds are subject to interest rate, credit and inflation risk.  For more information about Smart portfolio, contact us today.

Cavalier Investments, LLC is a Registered Investment Advisor.  Cavalier's research creates portfolio models that combine strategic, opportunistic and tactical holdings designed to provide performance that meets or exceeds relevant benchmarks.  Portfolios are structured based on risk of loss assessments and categorized as Growth, Balanced or Income.  Portfolio allocation models are provided without any additional fees other than management and other fees that are contained within each mutual fund or exchange traded fund included in the portfolio allocation model. 

An investment in a Smart Portfolio is subject to investment risks, including the possible loss of some or the entire principal amount invested.  There are no assurances that the portfolio will be successful in meeting its investment objective. Each underlying holding has its own investment risks.  Before purchasing any portfolio holding, the investor should review the Fund’s prospectus carefully.

Performance data assumes that holdings are maintained throughout the year and do not recognize potential costs of trading, platform fees, commissions or advisory wrap fees.  Portfolio performance and costs assumes utilization of the institutional or “no load” share class.  Dividends and capital gains are assumed to be reinvested. Users that make the decision to utilize the portfolios for investment accounts do so at their own discretion.  Data is compiled using Morningstar Direct Software; performance and cost data is assumed to be reliable.  

None of the mutual fund or ETF advisers, distributors, or their respective affiliates makes any representations regarding the advisability of investing in the Smart Portfolio Models.Past performance is no guarantee of future results.

©2019 Information and recommendations contained in Smart Portfolio market commentaries and writings are of a general nature and are provided solely for the use of Cavalier Investments' Smart Portfolio, its clients and prospective clients. This content is not to be reproduced, copied or made available to others without the expressed written consent of Cavalier Investments' Smart Portfolio. These materials reflect the opinion of Cavalier Investments' Smart Portfolio on the date of production and are subject to change at any time without notice. Due to various factors, including changing market conditions or tax laws, the content may no longer be reflective of current opinions or positions.

Past performance does not guarantee future results. Where data is presented that is prepared by third parties, such information will be cited, and these sources have been deemed to be reliable. However, Cavalier Investments' Smart Portfolio does not warrant the accuracy of this information. The information provided herein is for information purposes only and does not constitute financial, investment, tax or legal advice. Investment advice can be provided only after the delivery of Cavalier Investments brochure and brochure supplement (Form ADV Part 2A & B) and once a properly executed investment advisory agreement has been entered into by the client and Cavalier Investments. All investments are subject to risks. Investments in bonds and bond funds are subject to interest rate, credit and inflation risk.  For more information about Smart portfolio, contact us today.

Cavalier Investments, LLC is a Registered Investment Advisor.  Cavalier's research creates portfolio models that combine strategic, opportunistic and tactical holdings designed to provide performance that meets or exceeds relevant benchmarks.  Portfolios are structured based on risk of loss assessments and categorized as Growth, Balanced or Income.  Portfolio allocation models are provided without any additional fees other than management and other fees that are contained within each mutual fund or exchange traded fund included in the portfolio allocation model. 

An investment in a Smart Portfolio is subject to investment risks, including the possible loss of some or the entire principal amount invested.  There are no assurances that the portfolio will be successful in meeting its investment objective. Each underlying holding has its own investment risks.  Before purchasing any portfolio holding, the investor should review the Fund’s prospectus carefully.

Performance data assumes that holdings are maintained throughout the year and do not recognize potential costs of trading, platform fees, commissions or advisory wrap fees.  Portfolio performance and costs assumes utilization of the institutional or “no load” share class.  Dividends and capital gains are assumed to be reinvested. Users that make the decision to utilize the portfolios for investment accounts do so at their own discretion.  Data is compiled using Morningstar Direct Software; performance and cost data is assumed to be reliable.  

None of the mutual fund or ETF advisers, distributors, or their respective affiliates makes any representations regarding the advisability of investing in the Smart Portfolio Models.

A Strong Start Usually Leads to a Strong Year

Excerpt from Louis Navellier's Marketmail - 3/05/2019

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Our friends at the Bespoke Investment Group issued a report last Tuesday that showed that the S&P 500 is off to a great start this year, with 27 up days (73%) in the first 37 trading days. Since 1961, only eight other years have begun this strongly. In those eight cases, the S&P 500 rose by an additional average of 10.35% for the remainder of the year, with the smallest increase (2012) being 4.43% and the largest gain (1995) being 26.5%, so let’s hope history repeats itself with an additional 10% or greater rise this year.

It is important to remember that the U.S. remains an oasis of safety. China’s GDP growth has slowed, while Britain and the European Union (EU) are teetering on a recession. This is one reason why the U.S. dollar remains strong. Big multinational companies are being paid in eroding foreign currencies, so their earnings are being impacted by a massive currency headwind. However, domestic companies, especially many small-to-mid-capitalization stocks, are largely immune to any significant currency headwind.


In This Issue of Marketmail (Click Here to Read)

Bryan Perry profiles the new realities in the energy sector with some specific high-yield recommendations in the LNG field. Gary Alexander wishes a happy 10th birthday to this bull market, along with a profile of the terrible gloom that accompanied its birth. Ivan Martchev profiles the U.S. Treasury market as the most attractive in the developed world with yields likely to rise even higher. Jason Bodner covers the growth-oriented sectors that take turns (Healthcare last week) leading the market surge in 2019. Then I return to review Tesla and other trendy stocks vs. the more mundane business of picking long-term winners.

IIncome Mail:  Liquified Natural Gas is a Mega Theme for 2019

           By Bryan Perry

U.S. Exports of LNG Set to Surge


Growth Mail:  Happy 10th Birthday to the “Most Unloved Bull Market in History”

           By Gary Alexander

The Power of “Reversion to the Mean”


Global MailWhy the 10-Year Treasury is Likely Headed to 3%

           By Ivan Martchev

U.S. Rates are the Highest in the Developed World 


Sector Spotlight:  Sometimes a “No Brainer” Can Backfire

           By Jason Bodner

Healthcare Was King Last Week


A Look Ahead:  High-Flying “Fad” Stocks do not Reflect the Real Market

           By Louis Navellier 

The U.S. Remains the Oasis of the Investing World

Louie Navellier Update - March 2, 2019

Hi Everybody,

Our friends at Bespoke issued a good report last week that showed that the S&P 500 is off to a great start this year with more than 73% up days in the first 37 trading days.  Since 1961, there have been 8 similar strong starts to the year like this year.  On average, the S&P 500 rose an average of 10.35% for the remainder of the year the other 8 times, with the smallest increase being 4.43% (2012) and the largest gain being 26.5% (1995).  So let’s hope that history repeats.

In the meantime, CNBC keeps talking about an “earnings recession,” which is starting to spook many investors.  It is important to remind all investors that even though China’s GDP growth has slowed, plus Britain and the European Union (EU) are teetering on a recession, the U.S. remains an oasis, which is why the U.S. dollar remains so strong.  Big multi-international companies, like Caterpillar, are being paid in eroding foreign currencies and their earnings are being impacted by a massive currency headwind.  However, domestic companies, especially many small to mid capitalization stocks, are largely immune to any significant currency headwind and remain an oasis.  In summary, if you just focus on FAANG stocks or other stocks that have been “hyped” by financial media, the stock market can be scary.  Fortunately, the silver lining and critical path to now follow are clearly domestic stocks, especially small to mid capitalization stocks.

As an example of a “hyped” stock that is now struggling, Tesla was definitely impacted by the SEC request in federal court to hold Elon Musk in contempt over recent tweets that were supposed to be pre-approved.  Specifically, Musk’s February 19th tweet that “Tesla made 0 cars in 2011, but will make around 500k in 2019” conflicted with the official guidance that the company provided in a January 30th shareholder letter that as many as 400,000 vehicles would be delivered in 2019.  Interestingly, on February 19th, Musk hours later clarified his tweet by saying that he “Meant to say annualized production rate at end of 2019 probably around 500k, i.e., 10k cars/week” and then added that “Deliveries for year still estimated to be around 400k.”  The SEC said that Mr. Musk “did not seek or receive pre-approval prior to publishing this tweet, which was inaccurate and disseminated to over 24 million people.”  Musk subsequently tweeted that “SEC forgot to read Tesla earnings transcript, which clearly states 350k to 500k” and then added “How embarrassing ...,”  Yikes!  This will be an interesting case in federal court, since normally, a defendant is not suppose to publicly mock a regulator, especially on Twitter! 

In the meantime, Elon Musk confirmed on Thursday that Tesla is not expected to make money in the first quarter due to one-time charges and other financial commitments.  Specifically, Musk said “Given that there is a lot happening in Q1, and we are taking a lot of one time charges, there are a lot of challenges getting cars to China and Europe, we do not expect to be profitable. We do think that profitability in Q2 is likely.”  Tesla’s stock remains volatile, due to erratic quarterly results and the probability of an unfavorable federal court ruling.

A much more important federal court case is the fact that the NYSE, NASDAQ and the CBOE recently sued the SEC in a federal appeals court to stop the Transaction Fee Pilot, which the SEC approved in December.  This legal confrontation is unprecedented, since after seeking public comment, the SEC ignored the objections from the plaintiffs and proceeded anyway to limit the fees that they can charge for trading.  The Transaction Fee Pilot is supposed to start in late 2019 and has perturbed the NYSE, NASDAQ and the CBOE, because it undermines a widely used system of fees and rebates called “maker taker” when the exchanges pay rebates to brokers for some orders as well as charging fees for other orders. 

In defense of the SEC, critics of the maker-taker system say that it harms investors by encouraging brokers to send their clients’ orders to the exchange that pays the biggest rebate, rather than the exchange that gives clients the best result.  The Transaction Fee Pilot, which could last up to two years, would slash the fees that exchanges can charge for trades in hundreds of stocks and effectively forcing them to cut rebates for stocks as well.  

Now in defense of the NYSE, NASDAQ and the CBOE, in their complaint they say that the Transaction Fee Pilot would widen “bid-ask spreads.”  Furthermore, the exchanges have also voiced concern that trading would shift to off-exchange “dark pools” and private trading platforms run by some big banks.  According to the CBOE, almost 40% of U.S. stock trading volume occurs outside of the exchanges, so that percentage would likely rise under the Transaction Fee Pilot.  In the past, the D.C. Circuit Court has in the past vacated SEC regulations after finding the agency did not adequately consider their impact on capital raising or competition.  Overall, this will be a fascinating case, since the exchanges clearly do not want to lose more trading volume and control over stock trading.

Assuming that the SEC ultimately prevails in federal court and the Transaction Fee Pilot is implemented later this year, there will be a risk that the stock market’s liquidity may become more erratic.  I do not want any investors to worry, since my Quantitative grade calculates something called “residual variance” or “unsystematic risk,” which is the random risk associated with trading.  In other words, if unsystematic risk rises, then stocks will naturally have a lower Quantitative grade as volatility rises.  As a result, this is a good time to remind all investors that as risk rises, both Navellier's Dividend Grader and Stock Grader databases will naturally adapt to market volatility.  See link:

https://www.navelliergrader.com

Speaking of regulators, Fed Chairman Jerome Powell appeared before Congress last week and did a good job explaining how the Fed is striving to promote steady economic growth.  Specifically, in his prepared testimony to Congress, Powell said “While we view current economic conditions as healthy and the economic outlook as favorable, over the past few months we have seen some crosscurrents and conflicting signals.”  Key words like “conflicting signals” that justify a “patient approach” regarding future key interest rate changes, clearly signaled that the Fed Chairman is dovish.  What I find especially interesting is that Powell continues to be influenced by global events, since he said “growth has slowed in some major foreign economies, particularly China and Europe.”  I should also add that the Fed’s favorite inflation indictor, the Personal Expenditure Consumption (PCE) index rose only 0.1% in December and decelerated to an annual pace of 1.7% in 2018, so as long an the PCE remains below the Fed’s target of 2%, the Fed is expected to remain accommodative.

As I have recently said, Brexit is expected to be a major event, since companies, like Honda, are increasing fleeing Britain due to uncertainty over tariffs and the underlying business environment.  Yet, despite this uncertainty, both Britain and the European Union are now seeking to delay the March 29th Brexit deadline.  Specifically, Prime Minister Theresa May has promised that Parliament will have a chance vote to extend the Brexit deadline on March 12th.  However, Prime Minister May does not want to delay Brexit beyond March 29th, so this vote in Parliament seems to be more about appeasing rebellious lawmakers and ministers that believe a “no deal” exit would be a disaster.

The EU is hoping for a Brexit extension, but remains divided on the timeline.  Overall, it is apparent that politicians are doing what they do the best, which is to “kick the can down the road,” which is shaping up to be a disaster for both Britain and the EU.  The business community cannot properly plan amidst all this Brexit uncertainty, so both the British pound and euro remain weak, plus impending recessions for Britain and the EU look inevitable.

In the meantime, Venezuela remains a humanitarian disaster.  The fact that the Venezuelan military violently blocked trucks with food and medical aid on both the Brazilian and Columbia borders is expected to cause more desertions.  Columbia has reported on Tuesday that 320 soldiers deserted in a span of four days.  There are an estimated 200,000 troops in the Venezuelan military, so there are not mass defections yet.  However, many of the soldiers are also hungry due to acute food shortages, so it appears that it is just a matter of time before the military sides with the Venezuelan people, even though the Generals have gotten rich from the Maduro regime.

Last week, Vice President Mike Pence and Venezuelan opposition leader Juan Guaido agreed on a strategy to tighten the noose around President Maduro and his generals.  Specifically, Pence announced more sanctions against Venezuela and $56 million in aid for neighboring countries with Venezuelan refugees.  The detention of Univision’s Jorge Ramos and the seizure of his crews cameras after Ramos asked Maduro about “videos of some young people eating out of a garbage truck” is expected to help increase the international pressure to oust Maduro.  Ramos and his Univision crew were then subsequently deported from Venezuela.  Overall, Pence said regarding Maduro that “We hope for a peaceful transition to democracy but President Trump has made it clear: all options are on the table” and then added that President Trump is “100%” in support of Juan Guaido.

The economic news last week was largely positive.  On Tuesday, Case-Shiller reported that its 20-city index home prices rose 0.2% in December and 4.2% in the past year.  Twelve of the 20 cities surveyed actually posed home prices declines, with San Francisco posting the biggest decline of -1.4%.  Interestingly, homes in high tax states were experiencing the biggest declines, so the new federal tax policy that is limiting state income and property tax deductions is may be adversely impacting homes with high property taxes in high tax states.  Nationally, home prices are now appreciating at the slowest pace in over four years (since November 2014), so median home prices are expected to continue to stabilize in the upcoming months.  This is great news for the inflation statistics and will help convince the Fed to not raise key interest rates in the upcoming months.

The exciting news on Tuesday was that the Conference Board announced that its consumer confidence index surged to 131.4 in February, up from a revised 121.7 in January.  This was truly a big surprise, since economists were expecting the consumer confidence index to come in at 124.7.  The expectations component soared to 103.4 in February, up from 89.4 in January.  There is no doubt that the end of the federal government shutdown boosted consumer confidence.  Improving weather in the spring also tends to boost consumer confidence, so I expect that consumer confidence index will hit an 18-year high in the upcoming months.

On Wednesday, the National Association of Realtors announced that pending home sales surged 4.6% to 103.2 in January, which was substantially higher the economists’ consensus estimate of a 1% increase.  Despite this good news, in the past 12 months, pending home sales declined 2.3%, which is the 13th straight month than pending home sales have declined on a trailing 12-month basis.  Now that both home prices and mortgage rates have moderated, pending home sales may steadily improve, especially as the weather improves in the upcoming months.

On Thursday, the Commerce Department announced that GDP rose at an annual pace of 2.6% in the fourth quarter, which was substantially above analyst consensus estimate of a 1.9% annual pace.  For all of 2018, GDP rose at an impressive 2.9% annual pace, which matches 2015 as a strongest year in the past decade.  GDP growth decelerated from a 4.2% annual pace in the second quarter and a 3.4% annual pace in the third quarter.  The Commerce Department noted that “The deceleration in real GDP growth in the fourth quarter reflected decelerations in private inventory investment, PCE, and federal government spending and a downturn in state and local government spending.”

Overall, we remain in a “Goldilocks” environment characterized by a lack of inflation, moderate interest rates, a dovish Fed and a strong U.S. dollar.  There is no doubt that the U.S. remains an oasis amidst the impending Brexit chaos and concerns about global GDP growth.  The biggest challenge that investors have is identifying stocks that will sustain strong sales and earnings momentum in a decelerating environment.  Fortunately, thanks to both Dividend Grader and Stock Grader, Navellier has the computing power to data mine thousands of stocks and identify the crème a la crème.
 
Louie



DISCLAIMER This email message is intended only for the personal use of the recipient(s) named above. This message may be privileged and confidential. If you are not an intended recipient, you may not review, copy or distribute this message. If you have received this communication in error, please notify us immediately by email and delete the original message. Navellier & Associates Inc.'s outgoing and incoming emails are electronically archived and may be subject to review and/or disclosure to someone other than the intended recipient. The SEC suggests that clients compare the accuracy of portfolio statements provided by Navellier & Associates Inc. to statements provided to clients by their custodian Navellier & Associates, Inc. 1 East Liberty, Ste. 504 Reno, Nevada 89501 info@navellier.com Visit us on the web at: http://www.navellier.com

Is Economic Growth a Driver of Earnings?

This is a Market Update from Julex Capital Management:

Screen Shot 2019-02-27 at 2.29.59 PM.png

Many economists expect a slowdown in U.S. growth during 2019. The FOMC projected 2.3% growth for the year back in December, which is a reduction from the 3% growth observed in 2018. Meanwhile, Wall Street analysts have widely lowered their earnings estimates. According to FactSet, analysts are projecting earnings growth to be 4.5% this year, much lower than the 21.7% growth in Q3 2018.

Intuitively, earnings should be reflective of economic growth since the United States is a consumer-driven economy. Over the long haul, there is a clear positive correlation between the two metrics. Taking the average of the trailing 80 periods (20 years) of quarterly data, since 2009, it’s expected that every 1% increase in GDP will add 1.65% to aggregate corporate earnings (see Figure 1).

Screen Shot 2019-02-27 at 2.30.23 PM.png

But the relationship between earnings and GDP might not be so straightforward. In fact, GDP growth has been a poor indicator of earnings growth on a period-by-period basis. Going back to 1989 and ignoring two outliers during the financial crisis, quarterly corporate earnings are essentially independent of quarterly economic growth (correlation of just 0.26, see Figure 2). There are a couple of reasons to explain why this meaningful long-term trend has poor short-term predictive value, namely the increase in overseas sales and the rise in corporate profits relative to GDP.

Screen Shot 2019-02-27 at 2.30.43 PM.png

Currently, about 30% of the sales of S&P 500 companies come from overseas. This quantity is obviously tremendously influential to a domestic company’s bottom line, but it doesn’t factor into GDP calculations. Higher GDP growth rates, especially in emerging markets countries, could disproportionately aid companies with extensive international exposure.

Another point to keep in mind is the high growth of corporate earnings in relation to GDP. Not only has earnings growth drastically outpaced economic growth on an indexed basis, it has also been much more volatile (see Figure 3). Put another way, the scale of GDP makes it less sensitive than earnings to short-term factors like interest rates, currency fluctuations, tax policies, and demand/supply seasonality. For example, the December 2017 signing of the Tax Cuts and Jobs Act slashed the corporate tax rate from 35% to 21% and drastically affected corporate profitability, yet only slightly improved GDP growth.

Screen Shot 2019-02-27 at 2.31.13 PM.png

In summary, short-term earnings growth behaves very differently from GDP growth, though they have a robust positive relationship in the long run. In 2019, we expect earnings growth to fall close to its long-term equilibrium level since the impact of tax cuts has faded. Assuming 2-3% GDP forecast for this year, a 4-6% increase in earnings would seem like a reasonable estimate.







Disclosures

Julex Capital Management is a SEC-registered quantitative investment management firm specializing in tactical and factor-based investment strategies. The firm offers a variety of tactical unconstrained investment solutions aiming to provide downside risk management while maximizing the upside potentials using its unique Adaptive Investment Approach.   In addition, Julex offers active equity strategies to deliver security selection alpha uncorrelated with the traditional risk factors like size, value or momentum using its TrueAlpha(TM) multi-factor sequential screening approach.

The information in this presentation is for the purpose of information exchange. This is not a solicitation or offer to buy or sell any security. You must do your own due diligence and consult a professional investment advisor before making any investment decisions. The risk of loss in investments can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition.

The use of a proprietary technique, model or algorithm does not guarantee any specific or profitable results. Past performance is not indicative of future returns. The performance data presented are gross returns, unless otherwise noted.

 All information posted is believed to come from reliable sources. We do not warrant the accuracy or completeness of information made available and therefore will not be liable for any losses incurred. No representation or warranty is made to the reasonableness of the assumptions made or that all assumptions used to construct the performance provided have been stated or fully considered.

Cavalier Investments and Julex Capital Management are separate and unaffiliated and are not responsible for each other’s products, services or policies.  The views expressed by Julex are their own and may not necessarily be reflective of the views of Cavalier and should not be construed as such

The Market is Overbought and Likely to Deliver Slower, More Selective Gains

Excerpt from Louis Navellier's Marketmail - 2/26/2019

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I hate to be a party pooper, but I have to tell you that the stock market is grossly overbought. According to our friends at Bespoke Investment Group, 70.8% of the stocks in the S&P 500 are now overbought, which is the highest level in nearly three years (since March 2016). This 70% overbought threshold has only happened eight times in the past decade, according to Bespoke, and the S&P 500 has usually kept rising – by a median 2.1% and 5.6% in the next month and three months, respectively. So, the good news is that, based on historical parallels, the S&P 500 may continue to move higher, but at a slower pace.

Essentially, the stock market is entering a “funnel,” which I expect to become progressively narrower, with fewer stocks showing leadership. First-quarter 2019 S&P 500 earnings are expected to “hit a wall” due to more difficult year-over-year comparisons. Furthermore, due to a strong U.S. dollar, multinational stocks that account for about 50% of the S&P 500’s sales are fighting a strong currency headwind. 

As a result, companies that post strong sales and earnings momentum in a slower earnings environment – like my A-rated dividend growth and conservative growth stocks – should continue to exhibit relative strength and emerge as market leaders. Here are links to my Dividend Grader & Portfolio Grader services.


In This Issue of Marketmail (Click Here to Read)

This week, President Trump may negotiate a denuclearization deal with North Korea and a trade deal with China in the same week – after former Presidents have failed to make progress on either front. Bryan Perry covers the China deal and Ivan Martchev writes about North Korean investment options. In between those columns, Gary Alexander writes about media bias when covering stock markets, with media silence greeting this historically rapid recovery. Jason Bodner covers the phenomenal 8-week recovery in growth stocks, while I close with a look at Brexit, Europe, and what looks like Maduro’s final days in Venezuela.

Income Mail: The March 1 Trade Truce Extension is Looking Like a Done Deal 

     By Bryan Perry

Dealing with China’s Hyper-Growth Cyber Crime Network 

Growth Mail: The Market is Getting Boring – and That’s Great News

     By Gary Alexander

No News is Good News

Global Mail: How to Invest in North Korean Denuclearization

     By Ivan Martchev

Investment Surrogates Are Not Created Equal

Sector Spotlight: Growth Has Been Leading Us Out of the Ashes

     By Jason Bodner

Don’t Fight a Rising Market!

A Look Ahead: Brexit Problems Overshadow a Brewing European Recession

     By Louis Navellier

U.S. Energy Production Aids in Policing Venezuela and Other Dictators

Upcoming Webinar 3/6

Tactical Economic Portfolio

“Tactical Investing in a Late Stage Bull Market”

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What we'll cover in this webinar:

• Is a late stage bull market the right time to implement a tactical strategy?

• Learn how the Tactical Economic portfolio may protect client assets in a bear market.

• Summary performance: GIPs verified and over 8 year performance history since inception.

• Strategy continues to manage drawdowns through recent market volatility. Portfolio moved to Balanced equity and fixed income in Q4 2018.

• Portfolio typically experiences low single digit volatility and low portfolio drawdowns.

Louie Navellier Update - February 23, 2019

Hi everybody,

I hate to be a party pooper, but I have to tell you that that stock market is grossly overbought.  According to our friends at Bespoke, over 70.8% of the stocks in the S&P 500 are now overbought, which is the highest level in nearly three years (since March 2016).  This 70% overbought threshold has only happened 8 times in the past decade according to Bespoke and the S&P 500 has only risen a median of 2.1% and 5.6% in the next month and three months, respectively.  So the good news is that based on historical overbought occurrences, the S&P 500 may continue to move higher, but at a significantly slower pace. 

Essentially, the stock market is entering a funnel that I expect will become progressively more narrow because the S&P 500’s earnings in the upcoming months are expected to “hit a wall” due to more difficult year over year comparisons.  Furthermore, due to a stronger U.S. dollar, the multi-international stocks that account for approximately 50% of the S&P 500’s sales are now fighting a strong currency headwind and being paid in eroding currencies.  As a result, those companies that continue to post strong sales and earnings momentum in a decelerating environment, like my A-rated dividend growth and conservative growth stocks, should continue to exhibit relative strength and emerge as market leaders.  Here is a link to my Dividend Grader and Stock Grader databases, so you can see if your stocks are A-rated:

 https://www.navelliergrader.com

The economic news last week was mixed.  The Conference Board on Thursday announced that its leading economic index (LEI) declined 0.1% in January.  Ataman Ozyildirim, the director of economic research at the Conference Board said that initial jobless claims and “weakness in the labor market” contributed to the decline in the LEI, which appears to be influenced by the federal government shutdown.  Furthermore, 3 of the 10 LEI components, namely, building permits, new orders for capital goods, and new orders for consumer items, were not available due to the federal government shutdown.  As a result, the January LEI will likely be revised, since 30% of the LEI components were missing.

The National Association of REALTORS on Thursday reported that existing home sales in January declined 1.2% to a 4.94 million pace and are now at a 3-year low.  In the past 12 months, existing home sales have declined by 8.5%.  Median home prices rose by 2.8% to $247,500 in January, which is the slowest annual growth rate since 2012.  Existing homes are now on the market for 49 days, up from 42 days a year ago, so there are lots of signs that median home prices may finally be cooling.  Sales in the Northeast rose by 2.9% in January, while in the Midwest, South & West, existing home sales declined by 2.5%, 1% and 2.9%, respectively.  Overall, the housing market clearly remains soft.

The good news is that the Commerce Department reported that durable goods orders rebounded 1.2% in December, due largely to a 28.4% surge in commercial aircraft orders.  December durable goods orders were revised to a 0.7% increase, down from 1% previously estimated.  Excluding transportation orders, durable goods in November rose only 0.1%.  The business investment component in durable goods has fallen for two consecutive months, which may be due to rising uncertainty regarding global economic growth.

Speaking of global growth, there are formidable storm clouds on the horizon concerning Brexit.  Specifically, Britain must leave the European Union (EU) on March 29th and this is shaping up to be a disaster!  Already, Britain appears to be slipping into a recession over the Brexit mess.  As an example, Land Rover Jaguar is now struggling, announced 4,500 layoffs and is short of capital.  Another example is that on Tuesday, Honda announced that it would be closing its plant in Swindon, England in 2021 that employs 3,500 workers.

Some EU automotive companies, like Porsche, have warned its British customers that a 10% surcharge may be added after March 29th due to the fact that there is no agreement between Britain and the EU on vehicle tariffs.  Economies hate uncertainty, since both businesses and consumers tend to postpone purchases, which causes the “velocity of money” to grind to a halt and trigger recessions.

At the root of the Brexit problem is that Britain was suppose to pay the EU an substantial multibillion pound exit fee to leave, but Prime Minister May has not been able to get the House of Commons or Parliament to approve of any exit fee.  As a result, chaos reigns and both the British pound and euro are expected to remain weak due to the Brexit chaos.

Continental Europe may also be slipping into a recession.  Italy is already in an official recession after two consecutive negative GDP quarters and rising unemployment.  France is still dealing with the aftermath of its yellow vest protests.  The infighting within the EU persists and is being masked somewhat by Britain’s impending exit. 

Ironically, both the Bank of England and the European Central Bank (ECB) cannot cut interest rates significantly to fix their ailing economies, so more quantitative easing (i.e., printing money) may be their only option.  The only problem with quantitative easing it that it further weakens currencies and sparks inflation, since the price of imported goods then rise.

Interestingly, The Wall Street Journal on Tuesday reported that based on two-year government bonds, Finland, France, Germany and Austria all have negative yields due to ebbing confidence.  Although money is gravitating to what is perceived to be stable EU countries as the amount of negative government yield grows, that money is looking elsewhere and the U.S. is unquestionably the oasis.

Essentially, the Brexit chaos has caused money to flow into the U.S. and suppress our Treasury yields.  This international capital flight is expected to persist through March and possibly beyond, depending on the ongoing infighting within Europe.  The insults from the EU bureaucrats regarding Britain’s decision to leave the EU without a transition plan exposed just how bitter the EU is about Brexit, since without Britain, the EU will likely have to implement massive budget cuts.  Specifically, European Council President Donald Tusk’s provocative comments that there is “a special place in hell” for the British officials pushing for Brexit was a parting jab at the failure for EU officials in Brussels to extract any significant exit payment from Britain.

Compared to the rest of the world, the U.S. remains an oasis.  Thanks to all time record crude oil production, the U.S. is now driving world economic growth.  Emerging market economies are expected to recover somewhat due to the fact that they spend a lot of money on energy, so as energy costs decline, consumers in emerging markets have more disposable income.  The U.S. control over worldwide energy prices will eventually lead to political changes in Venezuela and possibly Iran as their respective economies collapse.  Like China has successfully done, the U.S. is now using its economic might to influence the world.  In the end, the ultimate goal is free trade for all, so the world can better prosper, but that is still decades away due to silly infighting as Britain and the EU are demonstrating.

Speaking of using economic might, President Trump last week in Miami delivered a scathing speech that warned Venezuela’s military authorities to that they would “lose everything” if they remain loyal to President Nicolas Maduro and refuse to allow emergency humanitarian aid that is piling up on the Colombian border.  The U.S. military continues to fly C-17 cargo planes to Colombia with nutritional supplements and hygiene kits.  Venezuelan opposition leader, Juan Guaido, is demanding that the Venezuela’s military allow in the humanitarian aid and has offered amnesty to military officers that disobey President Maduro’s blockade on the Columbian border. 

President Trump in his speech was also very critical of Cuba, which is reported to have 1,000 military and intelligence advisors to protect President Maduro.  Complicating matters further are approximately 400 Russian security personnel in Venezuela.  President Trump called President Maduro a “Cuban puppet” and warned that officials that keep Maduro in power that “the eyes of the entire world are upon you.”  Finally, President Trump said that “The twilight hour of socialism has arrived in our hemisphere” and concluded by saying “The days of socialism and communism are numbered, not only in Venezuela, but in Nicaragua and in Cuba as well.”  Obviously, by continuing to fly C-17 cargo planes to Colombia, the U.S. is planning to help with a massive humanitarian aid to Venezuela.  The best possible solution is for the Venezuela’s military to cede the humanitarian aid blockade and back opposition leader, Juan Guaido.

This chaos in our hemisphere is actually helping financial markets, since international confidence in the U.S. is boosting the U.S. dollar and suppressing Treasury yields.  Naturally, a stronger U.S. dollar lowers commodity prices and squelches inflation.  Lower energy prices in the U.S. should boost consumer spending, while lower interest rates should eventually help the automotive and housing industries to recover.  The U.S. economy has been remarkably resilient and when one sector has faltered, another has prospered.  The bottom line is the foundation under the U.S. economy remains strong.

Finally, the Fed released their Federal Open Market Committee (FOMC) minutes on Wednesday that revealed that they plan to announce a plan to stop shrinking their $4 trillion portfolio via asset sales later this year.  The FOMC minutes said “Such an announcement would provide more certainty about the process for completing the normalization of the size of the Federal Reserve’s balance sheet.”  This is big news folks, since the Fed has been systematically selling government securities and artificially keeping Treasury bond yields a bit higher than then might be otherwise.  So when the official announcement comes out that the Fed will stop selling $50 billion per month in government securities, I expect that Treasury bond yields will decline.  The FOMC minutes also revealed that several Fed officials lowered their economic outlook due to (1) softer consumer and business sentiment, (2) downgrades in foreign economies’ growth outlooks and (3) tighter financial conditions stemming from the year-end market swoon.  Overall, the FOMC minutes were very revealing and very positive for both bonds and stocks.

- Louie

DISCLAIMER This email message is intended only for the personal use of the recipient(s) named above. This message may be privileged and confidential. If you are not an intended recipient, you may not review, copy or distribute this message. If you have received this communication in error, please notify us immediately by email and delete the original message. Navellier & Associates Inc.'s outgoing and incoming emails are electronically archived and may be subject to review and/or disclosure to someone other than the intended recipient. The SEC suggests that clients compare the accuracy of portfolio statements provided by Navellier & Associates Inc. to statements provided to clients by their custodian Navellier & Associates, Inc. 1 East Liberty, Ste. 504 Reno, Nevada 89501 info@navellier.com Visit us on the web at: http://www.navellier.com

Old Worries End, New Worries Emerge, But Stocks Keep Rising

Excerpt from Louis Navellier's Marketmail - 2/20/2019

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The stock market celebrated last week over a bipartisan budget deal reached on Tuesday, making another federal government shutdown unlikely, despite the fact that the President was not happy with the resulting agreement. Like most such Congressional bipartisan agreements, both sides were somewhat perturbed, especially since the President subsequently declared a “state of emergency” to fully fund his border wall.

Furthermore, it continues to be widely reported that the Chinese trade negotiations are proceeding well enough that the new tariffs that were to be imposed on March 1st will not be implemented. With the China trade deal fears largely dissipated and a shutdown off the table, the stock market staged a big relief rally.

Speaking of politics, if you are looking for something to worry about, Britain’s March 29th exit from the European Union (EU) is shaping up to be a potential disaster for both the British pound and the euro. Ironically, Brexit uncertainty is good for the U.S., since the U.S. dollar is the beneficiary of international capital flight, which continues to suppress Treasury yields. In my management company’s top-rated ETF portfolios, we are invested in two Treasury ETFs staggered along the yield curve. 

Ironically, the last time our top-rated ETF portfolios were parked in Treasuries was 2016, when we sold Treasury ETFs the day after the surprising Brexit vote that caused the 10-year Treasury yield to plunge to 1.36% in a global flight to quality. We hope to profit from Brexit again if Treasury yields move lower.


In This Issue of Marketmail (Click Here to Read)

Bryan Perry says the market is ignoring some pretty huge debt numbers, as well as calls for a market “retest.” Gary Alexander looks at 80 years of Presidential election cycles and sees a good chance for a double-digit market gain this year. Ivan Martchev takes a deeper look at a stock we don’t like much, Tesla, while Jason Bodner reviews the growth-oriented sectors leading this recovery. Then, I will return to analyze some recent positive trends in the political landscape and the Fed’s new inactive policies.

Income Mail: Calls for a Market Retest are Falling on Deaf Ears 

           By Bryan Perry

The Market is Ignoring Massive New Debts – For Now


Growth Mail: Expect Another Double-Digit Pre-Election Year Market Gain

           By Gary Alexander

Handicapping 2020 – Waiting for the “Adults” to Arrive


Global Mail: Is Tesla Ripe for a Fall?

           By Ivan Martchev

Model 3 or Die


Sector Spotlight: It Helps to Be Both Good AND Lucky

           By Jason Bodner

Growth Sectors Continue to Lead the Pack


A Look Ahead: America is Finally Looking Forward, Not Back

           By Louis Navellier

The Economic News Continues to Argue Against Rate Increases

The S&P 500 is Now Up Over 16% in Just Six Weeks

Excerpt from Louis Navellier's Marketmail - 2/12/2019

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The market weakness in the last few days is just normal consolidation after a massive rally since the Christmas Eve lows. In the six weeks from December 25 to February 5, the S&P 500 rose over 16%, so a couple of down days are nothing to worry about. However, there is no doubt that President Trump’s National Economic Advisor Larry Kudlow’s comments on Thursday – that a “sizable distance” remains between the U.S. and China in protracted trade negotiations – spooked some nervous investors.

Kudlow said that previous talks covered “a tremendous amount of ground” and that enforcement will be very important, as well as technical and structural issues. Whether or not President Trump will meet with China’s President Xi before the March 1st deadline is uncertain, but Kudlow confirmed that in the spirit of good faith the tariffs on Chinese goods would remain at 10% (versus the scheduled increase to 25%). So overall, the China trade deal negotiations are proceeding, and both sides appear to be acting in good faith.

Treasury yields remain remarkably stable, despite a slightly lower bid-to-cover ratio at last week’s Treasury auctions. Wall Street is no longer distracted by interest rates and is now much more focused on fourth-quarter earnings announcements and 2019 guidance. So far, according to FactSet, 66% of the S&P 500 companies have announced their fourth-quarter results, posting annual earnings growth of 13.3% and annual sales growth of 7.0%, which are +4.0% and +1.2%, respectively, above analyst estimates.


In This Issue of Marketmail (Click Here to Read)

Bryan Perry begins by handicapping the scary rhetoric of some Democratic Presidential candidates, then focuses on his specialty, high-dividend stocks. Gary Alexander looks at our demographics as destiny, showing that America still holds a long-term advantage over East Asia and Europe, but we must address entitlements and immigration to keep growing. Ivan Martchev shares the encouraging news of junk bonds hitting new 52-week highs as a harbinger of higher stock prices. Jason Bodner sees a temporary oversold condition before we assault new highs, but he is encouraged by the strong rebound in semiconductors. In my closing column, I take on Schumer and Sanders on stock buy-backs, and analyze all the economic data.

Income Mail:  

The Scary Spector of Socialism

           By Bryan Perry

Dividends Matter, Now More Than Ever

  

Growth Mail:  

What an Aging America (and World) Means for Investors

           By Gary Alexander

East Asia and Western Europe are Aging More Rapidly

  

Global Mail:

Read Like a Bond, Trade like a Stock”

           By Ivan Martchev

New 52-Week Highs for Junk Bonds Likely Mean New 52-Week Highs for Stocks

 

Sector Spotlight:

The Domino Effect Works in Bull or Bear Markets

By Jason Bodner

Semiconductor Index up Over 20% Since Christmas

 

A Look Ahead:

Schumer & Sanders Knock Share Buy-backs for Bizarre Reasons

           By Louis Navellier

The Economic News Remains “Mixed,” Confounding Fed Watchers

The Strongest January Since 1987 Lifts U.S. Stocks

Excerpt from Louis Navellier's Marketmail - 2/5/2019

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The S&P 500 rose 2.34% last week, nearly 8% in January, and 15% since Christmas. This January was the strongest in 32 years, especially for small-capitalization stocks, which had their strongest start in over 40 years. Despite this strength, the market initially got up on the wrong side of the bed last week after some big companies warned that sales were slowing down, mostly due to a lack of demand from China.

Complicating matters further for these multinational companies is the fact that the U.S. dollar remains strong, while the Chinese yuan and most other currencies remain weak, so when multinational companies are paid in eroding currencies, they all too often have to issue revenue warnings. The Eurozone’s growth is now increasingly precarious. Since approximately 50% of the S&P 500’s sales are generated outside of the U.S., I expect more multinational companies to issue revenue warnings in the upcoming weeks.

Fortunately, some multinational companies are prospering. For example, on Wednesday, Boeing posted a substantial earnings surprise and provided positive guidance. So far, fourth-quarter results for S&P 500 stocks are running at an annual sales gain of 7.4% and annual earnings pace of around 13%. I believe that companies which continue to surprise and guide higher, like Boeing, will continue to be market leaders. 

Navellier & Associates owns BA in managed accounts and a sub-advised mutual fund. Louis Navellier and his family do not own BA privately.


In This Issue of Marketmail (Click Here to Read)

Bryan Perry opens with a mixed review of the current fundamentals, fearing the market may “retrace some of its recent gains” before rising further. Gary Alexander examines the manic-depressive winter market and projects a “pause that refreshes” before the normal Spring rally. Ivan Martchev sees added hope with the Fed’s new “patience,” along with indications that the U.S. dollar should remain relatively strong. Jason Bodner is pleased to see positive fundamentals once again driving the market, and growth-oriented sectors leading this recovery. Then, I’ll add my closing look at the economy and stock market.

Income Mail:  

The Market Appears to be “Mai-tais and Yahtzee” for Now 

           By Bryan Perry

“Confused” Doesn’t Begin to Explain the Current Investment Landscape

  

Growth Mail:  

The Winter of Our Discontent – and Spring of Hope?

           By Gary Alexander

Most Fundamentals Support Further Market Gains

  

Global Mail:

The Fed’s Expeditious U-Turn

           By Ivan Martchev

Implications for the U.S. Dollar

 

Sector Spotlight:

Where Have All the Bears Gone?

           By Jason Bodner

Growth Sectors are Leading the Charge

 

A Look Ahead:

“As January Goes, So Goes the Year”?

           By Louis Navellier

A Great Jobs Report Capped a “Mixed” Week of Indicators

The Market Returns to "Normal" After Christmas Lows

Excerpt from Louis Navellier's Marketmail - 1/15/2019

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I think the best way to describe the market recovery in the past three weeks is a “return to normal,” or “normalization.” I was especially encouraged to see many small-capitalization stocks “melt up” after suffering from liquidity woes in the fourth quarter. It was also rewarding to see some of the best stocks on the board rising strongly, even before their fourth-quarter earnings announcements come out. For instance, analyst upgrades from Raymond James and UBS helped Netflix (NFLX) steadily appreciate last week. The next big test will be the actual fourth-quarter earnings announcements – which begin this week.

Navellier & Associates owns NFLX in managed accounts and or our sub-advised mutual fund. Louis Navellier and his family own NFLX, via the sub-advised mutual fund and in a personal account.


In This Issue of Marketmail (Click Here to Read)

Bryan Perry offers a fascinating analysis of the changing dynamics of Chinese and neighboring Asian manufacturing plants, which portend a Chinese compromise on trade. Gary Alexander follows with an equally fascinating analysis of the “clean, green, and unseen” nature of GDP growth, the opposite of the belching steel mills of old. Ivan Martchev offers an encouraging message from the junk bond market, which never confirmed any “bear market” warnings during the recent stock slide. Jason Bodner gives an equally vital analysis of recent stock market actions in light of his unique “unusual institutional buying” indicators. Then I’ll take a look at “normalizing” ETF spreads, Treasury yields, and economic indicators.

Income Mail:  

The Sino-U.S. Trade War is Adding Fuel to The Chinese Exodus 

           By Bryan Perry

Companies to China: “We’re Outta Here!”

  

Growth Mail:  

Most Growth is Clean, Green, and Unseen

           By Gary Alexander

The Internet Increases Productivity Without Boosting GDP Much

  

Global Mail:

The Dichotomy Between Junk Bonds and Stocks Continues

           By Ivan Martchev

It’s the Market (before the Economy), Stupid!

 

Sector Spotlight:

What Happens When Stocks Fall 15%+ Then Rapidly Rise 10%?

           By Jason Bodner

ETFs are the “Tail that Wags the Dog”

 

A Look Ahead:

ETF Spreads and Treasury Yields Have “Normalized” in 2019

           By Louis Navellier

The Market Recovery Has Coincided with the Partial Government Shutdown

"Smart Money" Buyers are Helping the Market to Firm Up

Excerpt from Louis Navellier's Marketmail - 1/8/2019

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Trading volume has been gradually improving, now that the holidays are over. I was encouraged that when the stock market initially sold off early Wednesday, the “smart money” quickly materialized and helped the overall stock market to stabilize. This smart money has been appearing predictably during down trading days for the past three weeks and is certainly helping the overall stock market to firm up.

Unfortunately, after the market close on Wednesday, Apple (AAPL) lowered its fourth-quarter sales forecast, blaming China for its lower-than-expected trade growth. As a bellwether stock, Apple’s lower guidance naturally spooked many other technology stocks. The truth of the matter is that approximately half of the S&P 500’s sales are outside of the U.S., so investors are increasingly concerned that other multinational companies may also lower their fourth-quarter sales guidance, due to slowing global GDP growth and eroding foreign currencies. Here is a link to my Thursday podcast that discussed these topics.

Navellier & Associates owns AAPL, NFLX, and LULU and does not own Ford in managed accounts and or our sub-advised mutual fund. Louis Navellier and his family own AAPL, NFLX, and LULU and does not own Ford via the sub-advised mutual fund. Louie Navellier & his family own AAPL and NFLX in a personal account.


In This Issue of Marketmail (Click Here to Read)

Bryan Perry likes Jerome Powell’s conciliatory script from last Friday, but he still prefers the safety and income of REITs in 2019. Gary Alexander looks back in history 25 to 200 years ago for those who think America has insurmountable problems today. Ivan Martchev thinks Apple’s recent decline reflects the economic slowdown in China and the general slowdown in global growth. Jason Bodner shares some very good news about past recoveries following long periods of depressing down days like we’ve seen lately. Then, I’ll close with the latest news on sinking Treasury yields and Friday’s robust jobs report.

Income Mail:  

Taking Stock of the New Year’s Bounce 

           By Bryan Perry

REITS Look Attractive for Income

  

Growth Mail:  

Memo to Those Wimps Who Think These are Hard Times

           By Gary Alexander

Crazy Bloggers and Negative Media Cause Sane Investors to Sell Stocks

  

Global Mail:

Apple Didn't Tell Us Anything New About China

           By Ivan Martchev

Don't Blame Trump for China

 

Sector Spotlight:

Press Releases (Pens) Move Markets More than Wars (Swords)

           By Jason Bodner

A Happy Ending for a Sad MAP-IT Ratio

 

A Look Ahead:

The Biggest (Ignored) News is the Decline in Treasury Yields

           By Louis Navellier

The Jobs Report (and the Fed) Lifted the Market on Friday

We Finally (Thankfully) End a Very Tough Market Year!

Excerpt from Louis Navellier's Marketmail - 1/2/2019

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I hope everyone had a wonderful New Year’s Day. From a market perspective, Christmas Day came as a relief after the annual lows set on Monday, Christmas Eve Day, when the S&P fell just two ticks (-19.8%) short of closing down 20% from its recent peak – the general definition of a “bear market.” After a lower opening last Wednesday, the major indexes gained about 6% in the three days after Christmas, but most indexes remain down about 7% for 2018 as a whole, as December wiped out all 2018’s hard-fought gains.

I did a podcast last Monday that explained why we are now grossly oversold, based on the S&P 500’s dividend yield of 2.22% vs. the 10-year Treasury bond yield of 2.72%. Since most stock dividends are taxed at a maximum Federal rate of 23.8%, while Treasury interest is taxed at a maximum Federal rate of 40.8%, the stock market yields more (after taxes) than getting out of the stock market, for most investors.  

The wild stock market gyrations last week may have been complicated by tax selling. Specifically, last Monday’s dramatic sell-off seems to be largely attributable to record ETF redemptions, which adversely hit many stocks due to light holiday trading volume. Then Wednesday’s record one-day surge seemed to be propelled by short covering and “smart money” that was bargain hunting. Finally, Thursday’s intraday pullback was complicated by year-end tax selling, as well as quarter-end window dressing. 

As I said in my Thursday podcast, these daily oscillations will likely persist into January, when trading volume typically picks up. The analyst community was largely absent last week (many were out skiing), but when they get back later this week, I will be on the lookout for any analyst upgrades and downgrades. 

After a rough 2018, I am expecting that we’ll see a more prosperous New Year!


In This Issue of Marketmail (Click Here to Read)

The year ends with some volatility, so 2019 has to basically dig us out of last year’s December “hole” in the market. Bryan Perry discusses some of the technical hurdles the S&P 500 must face, along with the many unresolved political threats lingering over Washington, DC. Gary Alexander uses the year-end to review last year’s best books, not only on the market but on the major mega-trends of global growth. Ivan Martchev reviews the manic-depressive market, along with some advice for the rookie Fed Chair and President. Jason Bodner looks deeper into the ETF algo-traders and how they may be subverting this market. Until the government opens for business again, most economic statistics will not be released, but I look at the latest economic trends (and market rates) to argue that the Fed need not raise rates again.

Income Mail:  

Shifting Winds of Sentiment Greet the New Year 

     By Bryan Perry

Reality Check for the Reality-Show President

  

Growth Mail:  

The Top 10 Books of 2018

     By Gary Alexander

Give Good Books to the Next Generation – to Build Their IQ and Civilize Them

  

Global Mail:

2018 Was the Year of Manic Depression for the Stock Market 

     By Ivan Martchev

The Rookie Fed Chairman Faces the Rookie Politician

 

Sector Spotlight:

The ETFs are in Control Now

     By Jason Bodner

Look for Today’s Hated Stuff to be the Bright Spots of 2019

 

A Look Ahead:

Why the Fed is Not Likely to Raise Rates in 2019

     By Louis Navellier

The Stock Market Decline Hit Consumer Confidence Hard

The Fed and Political Deadlock Derailed the Market Yet Again

Excerpt from Louis Navellier's Marketmail - 12/26/2018

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Stocks rebounded only briefly last Tuesday and intraday Wednesday, until a shocking Federal Open Market Committee (FOMC) statement derailed the overall stock market and resulted in high-volume “capitulation” selling to set new annual lows on three consecutive days last week, but if you look at a chart of each index, it is evident that all three major indices initially “retested” on light trading volume on Monday and then subsequently on higher trading volume on Wednesday, Thursday and Friday. 

Unfortunately, on Wednesday, the FOMC statement was not dovish, as I had anticipated. The Fed not only raised its key interest rate 0.25%, but also signaled two additional key interest rate hikes in 2019. At his press conference, Fed Chairman Jerome Powell did nothing to calm financial markets. Although the Fed lowered its inflation forecast, their forecast was still way too high, ignoring all of the recent commodity price deflation. Here’s a link to my podcast on Wednesday, and yet again on Thursday.

So even though the Fed is providing guidance of higher rates in 2019, Treasury yields were falling in the wake of its FOMC statement. Confused? I cannot say enough how perplexed I am about why the Fed is ignoring obvious market forces and a lack of inflation. It is very odd for Treasury yields to move in the opposite direction of the Fed’s guidance, so I will be rooting for falling market rates to continue to derail the Fed’s intended interest rate hikes in 2019 – since the Fed does not like to invert the yield curve.


In This Issue of Marketmail (Click Here to Read)

We all had a wonderful Christmas break with families, but there’s no getting around the mountains of coal Santa left all over Wall Street and Washington DC. Bryan Perry begins Income Mail by lacerating the Fed for their “bait and switch” double-talk and deceptive language following last week’s FOMC meeting. Gary Alexander follows with harsh words for those citing some mythical “global economic slowdown” for causing this latest panic selloff. Ivan Martchev wonders why others are talking about a coming recession with 3.7% (and falling) unemployment and 3% GDP growth. Jason Bodner takes a much closer look at the machinations of ETF traders and finds some new causes for the recent volatility there. Then, I’ll wrap it up with a call for a some more sanity at the Fed and Wall Street in coming weeks.

Income Mail:  

No Way to Sugar Coat How the Fed Blew It 

     By Bryan Perry

The Writing is on “The Wall” (and other charts)

  

Growth Mail:  

WHAT “Global Growth Slowdown”?

     By Gary Alexander

Is the Market Really Fearing a “Great Earnings Slowdown”?

  

Global Mail:

2019 is the Year of a New Economic Expansion Record 

     By Ivan Martchev

Can the Stock Market Go Down in a Good Economy?

 

Sector Spotlight:

What One Word Would Best Describe This Market?

     By Jason Bodner

The Role of ETFs in Creating Selling Panic Loops

 

A Look Ahead:

Treasury Secretary Steve Mnuchin Goes on the Warpath for Fiscal Sanity

     By Louis Navellier

Most Economic Indicators Point Toward Fed Restraint (If They’re Listening)

Friday and Monday Market the Fourth Retest of Market Lows - Just Like Last Spring

Excerpt from Louis Navellier's Marketmail - 12/18/2018

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Let’s start with the good news. The Dow Industrials, the S&P 500 and the NASDAQ Composite all made new intraday lows last Monday. However, many leading NASDAQ stocks quickly rallied on Monday, helping most market averages rally intraday. Subsequently, the stock market opened strong on Tuesday, only to consolidate later. Then, Friday represented the fourth retest of the lows, on light trading volume. 

Interestingly, after the February 5 lows, the stock market also had to retest those lows four times on light trading volume for the Dow Industrials and the S&P 500 (the NASDAQ Composite only retested twice). Just like now, it took about three months – until the end of April – for the retests to be exhausted.

The bottom line is that the stock market is “bouncing along the bottom” and systematically exhausting all the selling pressure. As long as there is no panic selling on high trading volume, we should not worry and use these dips as potential buying opportunities. I should also add that on recent selloffs, there has been relative strength in many leading NASDAQ stocks under the surface, so there is likely quite a bit of “smart buying” going on from bargain hunters, as well as companies buying back their own shares. 

I discussed last week’s many conflicting market dynamics in more detail on my Friday podcast and Monday podcast.


In This Issue of Marketmail (Click Here to Read)

Bryan Perry cites slower growth in Europe and China for causing much of the current market malaise. Both Gary Alexander and Jason Bodner take a fresh look at U.S. market metrics, but they start off with some humor, since market metrics don’t seem to matter to traders these days! I can sympathize, since my column covers how news headlines push the market up and down day to day more than the fundamentals (which don’t change that rapidly). Ivan Martchev wraps up his 2018 predictions on the dollar vs. gold, along with his views on emerging market currencies and Fed policy decisions, and I handicap what might happen tomorrow if the Fed raises rates, but gives us some clear hope that they may be done for now.

Income Mail:  

The Nuts and Bolts of the Current Market Landscape 

     By Bryan Perry

The Global Grinch Stole the U.S. Santa Claus Rally

  

Growth Mail:  

The Keystone Kops are Running Most Major Governments Now

     By Gary Alexander

The Market is Fixated with Politics & Disengaged from the Economy

  

Global Mail:

A Good Year for the Dollar

     By Ivan Martchev

Big Week for the Fed

 

Sector Spotlight:

All Joking Aside, This Market Will Recover

     By Jason Bodner

Believe it or Not, The Tech Sector is Still Positive Year-to-Date

 

A Look Ahead:

The Market Isn’t Paying Much Attention to the Fundamentals These Days

     By Louis Navellier

Sharply Falling Prices Should Put Pressure on the Fed to Leave Rates Alone

The Media Missed the Meaning of Last Week's Market Decline

Excerpt from Louis Navellier's Marketmail - 12/11/2018

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Essentially the stock market likes to “react” first and “think” second. For example, last Monday, the market liked the trade truce with China, but on Tuesday, the financial media said investors had second thoughts about the trade spat with China and triggered a market selloff. But I think they missed what really happened. The catalyst for Tuesday’s market selloff came from Europe. First, British Prime Minister Theresa May suffered a humiliating defeat in the House of Commons and is expected to be similarly rejected by Parliament, so Britain may be getting a new Prime Minister due to the Brexit mess. Second, the worst protests in Paris in 50 years – over an increase in the tax on diesel in a carbon tax revolt – resulted in French President Emmanuel Macron doing a rare about face, postponing higher diesel taxes. 

Both Italy and Germany suffered negative GDP growth in the third quarter. Italian unemployment surged by 139,000 in the past two months and its unemployment has reached 10.6%, up from 10.1% two months ago. So, not only is the British pound weak, but the euro has also been weak, triggering more capital flight into the U.S. dollar, which in turn is pushing U.S. Treasury yields down. These events on Tuesday triggered a “flight to quality” that caused the 10-year Treasury bond yield to finally collapse below the 3% level. Here are the links to my Tuesday and Thursday podcasts explaining last week’s market events.


In This Issue of Marketmail (Click Here to Read)

Bryan Perry writes about the manipulation of this market going on in the “Algo” shops, the silence of the SEC and the possibility that the Uptick Rule could help police the manipulators. He also urges the Fed to do “nothing” next week. Gary Alexander overlooks the current market malaise to address the widespread denial of the good news in global wealth and health – ignored by almost everyone. He’ll give a test to see how well you know some of these facts. Ivan Martchev covers two felonious events uncovered last week to see if they might have an impact on the market to match “real” economic news, like recessions. Jason Bodner looks beneath the red paint in the sector snapshots to see unusual institutional buying eclipsing selling, an advance sign of a market recovery. I’ll cover some of the same territory in my closing remarks: The disconnect between good news and market panics, and the importance of next week’s Fed meeting.

Income Mail:  

Fighting the Fed and the “Algo” Shops

     By Bryan Perry

History is Not on the Side of the Fed

  

Growth Mail:  

Let’s Address “Global Wealth & Health Denial” in 2019

     By Gary Alexander

The Correct Test Answers: See How You Scored

  

Global Mail:

Two Felonies as Economic Events 

     By Ivan Martchev

The Huawei-Cohen 1-2 Punch

 

Sector Spotlight:

Unusual Institutional Buying is Now Outpacing Selling

     By Jason Bodner

Another Sea of Red Hit Most Sectors Last Week

 

A Look Ahead:

Why the Great Disconnect Between Good News & Market Panics?

     By Louis Navellier

All Eyes Are Now on the Fed

As We Expected, Stocks "Melted Up" After the Fed's Dovish Words

Excerpt from Louis Navellier's Marketmail - 12/04/2018

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Source: dailypriceaction.com

Source: dailypriceaction.com

Stocks bounced back last week on improving trading volume as a “melt up” ensued and short sellers ran for cover. The Dow Industrials gained over 1,250 points (+5.16%) on the hope that the Fed may soon tap the brakes on raising key interest rates. The S&P 500 rose 4.85% and the NASDAQ rose 5.64%. Wall Street is now expecting a December Fed rate hike, but maybe just one key interest rate hike in 2019. 

On Wednesday, Fed Chairman Jerome Powell got both bond and stock markets excited by appearing to be more dovish in a speech before the Economic Club of New York. Specifically, Chairman Powell said, “Interest rates are still low by historical standards, and they remain just below the broad range of estimates of the level that would be neutral for the economy … that is, neither speeding up nor slowing down growth.” By saying that rates are “just below neutral,” Powell basically implied that the Fed might be raising rates only once or twice more. In his best Fedspeak, he seemed to be implying that the U.S. economy is close to meeting the Fed’s mandate of promoting maximum employment with price stability.

Over the weekend, all eyes were on President Trump at the G20 meeting in Argentina, where he and Chinese President Xi Jinping met during a long steak dinner to hammer out what was later announced as a 90-day truce to work out the details of a cease fire in the trade war. Trump agreed not to raise tariffs on $200 billion of Chinese goods from 10% to 25% on January 1. China agreed to buy a “very substantial” amount of agricultural, industrial, and energy products, and both sides agreed to open up their markets.

Overall, last week was an encouraging week. I am happy to see the short sellers get squeezed and for the stock market to resume “melting up” on improving trading volume. Despite last week’s strength, financial markets will eventually have to deal with (1) Brexit, (2) a detailed resolution of the trade deal with China, (3) the upcoming FOMC meeting, and (4) a continuing war of words by President Trump toward the Fed.


In This Issue of Marketmail (Click Here to Read)

After the best week in seven years, Bryan Perry still has concerns about the China accord and economic indicators, preferring dividend stocks in 2019. Gary Alexander counters the recent gloom with a closer look at the many other times this bull market has corrected 10% or more. Ivan Martchev may be our most bullish columnist this week, predicting a new high in December or January and no recession before 2020. Jason Bodner notes the return of the growth sectors and the long-awaited return of buyers over sellers, while I cover the escalating war of words by President Trump vs. the Fed Chair over Fed policy decisions.

Income Mail:  

Dividend Stocks Should Shine in 2019 

By Bryan Perry

Bullish Technical Charts for “Stodgy” Income Assets

  

Growth Mail:  

Another 10% Correction Causes Another Wave of Panic

By Gary Alexander

Buy When Sentiment is “In the Dumpster”

  

Global Mail:

Here Come New Highs for U.S. Stocks

By Ivan Martchev

2019 Outlook and Beyond

 

Sector Spotlight:

Growth Sectors Led the Market’s Surge Last Week

By Jason Bodner

The Ratio of Buyers to Sellers Took a Big Leap Up Last Week

 

A Look Ahead:

Trump Blames Powell for Stalling the Housing & Auto Markets

By Louis Navellier

The Consumer Remains the Brightest Spot in the Economy