Excerpt from Louis Navellier's Marketmail - 7/16/2019
July is a seasonally strong month and with many market pundits convinced that the Fed will cut key interest rates in late July at the next Federal Open Market Committee (FOMC) meeting, Wall Street is now focusing on the upcoming second-quarter announcement season, fueling market highs in most indexes, with the S&P 500 up 20.2% through Friday, the Dow up 17.2%, and NASDAQ up 24.4%.
Earnings expectations are low, with S&P 500 companies forecast to post a 1.6% year-over-year earnings decline for the second quarter. However, due to continued strong stock buy-back activity, a pessimistic analyst community, and the fact that positive operating earnings surprises are common, I expect the S&P 500 to eke out a small earnings gain for the quarter, although it could be a close call. Either way, stocks that continue to sustain strong earnings momentum are poised to break out and emerge as market leaders.
Due to operating margin compression, sales are growing faster than earnings, so I expect that sales growth may be more closely watched than earnings, but I expect those stocks that are still sustaining expanding operating margins to “break out,” since their earnings growth will still be growing faster than sales.
Bryan Perry credits central banks with helping to fuel this bull market, but the big push into U.S. equities comes from the superior returns available here vs. the rest of the world. Gary Alexander responds to some negative videos about America by adding some offsetting positives while also saying we need to address these many challenges to growth to remain #1. Ivan Martchev analyzes the role of MZM (Money Zero Maturity) as well as Fed policy in the recent bull market, while Jason Bodner takes a victory lap for his recent bullish predictions while tempering his long-term positive view with warnings about August. I’ll close with a positive view of a rising second half, based on history, Fed policy, and recent economic news.
Income Mail: There Is No Playbook for Today’s Central Bank Monetary Policy
By Bryan Perry
The “Lost Decade” for Markets Outside the U.S.
Growth Mail: Is America Great, or Just “OK”? Declining or Still #1?
By Gary Alexander
The Myth of America’s Decline…a Perennial Rerun
Global Mail: The Fed Made the Dovish Pivot Before the Last Rate Hike
By Ivan Martchev
Money Supply is Not the Sole Driver of Stock Prices
Sector Spotlight: Warning: Bullish Bragging Begins… Now
By Jason Bodner
Expect Higher Market Levels in 2019, After a Short Pause
A Look Ahead: The Third Year of the Presidential Cycle is the Best
By Louis Navellier
Fed Chair Powell is Now Clear About the Next Rate Cut