Excerpt from Louis Navellier's Marketmail - 4/2/2019
A slightly-inverted yield curve continues to spook investors, but our friends at Bespoke Investment Group documented the fact that during the previous six yield curve inversions, the S&P 500 rose by an average 1.75%, 6.16%, and 8.13% over the next month, three months, and year, respectively. Even more dramatic, after the last four times the yield curve first inverted, the S&P averaged gains of 19% after 12 months.
Our friends at Bespoke also like to follow the “smart money” on Wall Street. They noted last week that in January and February these “smart” folks liked to buy during the last hour of trading (3-4 pm EST). But in March, Bespoke says, there has not been much buying pressure in the last hour. This has raised some concerns that these smart buyers may have turned into patient net sellers, implying a coming correction.
Either way, I think the evidence is clear that today’s stock market is getting much more selective, due largely to the anticipation of a rapid deceleration in corporate earnings for the next two or three quarters, so this is the time in a recovery cycle when we try to be super-selective in our stock portfolio selections.
In a typical overreaction, market pundits are now calling for “immediate” rate cuts from the Fed. Bryan Perry says this is not in the cards. Next up, Gary Alexander, Ivan Martchev, and Jason Bodner defuse the scare-mongering of those who fear an “inverted yield curve,” with Ivan focusing on the junk bond signal and rising EPS later this year. Jason also marks the possible end to an “overbought” market condition last week. Then, I’ll close with an analysis of bonds vs. stocks and creeping deflation trumping inflation.
Income Mail: Are Calls for “Immediate” Rate Cuts Warranted?
By Bryan Perry
“Advice from the Ice” Goes a Long Way
Growth Mail: The Best Opening Quarter in 21 Years
By Gary Alexander
The Latest Premature Tizzy-Fit – An Inverted Yield Curve
Global Mail: The Dichotomy Between Junk Bonds and Treasuries Continues
By Ivan Martchev
Aggregate EPS Still Growing in 2019
Sector Spotlight: “Help Me (if you can), I’m Feeling Down”
By Jason Bodner
Growth Sectors Lead (with One Exception)
A Look Ahead: Chaos in the Bond Markets Makes Stocks Relatively Attractive
By Louis Navellier
Deflationary Forces are Building, Adding to Stocks’ Luster