July 16, 2019

Our friends at Bespoke last week reported that the third year of a Presidential election cycle has historically performed the best since 1928, with an average 12.8% gain for the S&P 500. For lack of a better word, consumers tend to be happy when Presidential candidates are running around and promising everything imaginable. Free healthcare and eliminating student loan debt sounds wonderful, but I suspect that these promises will have to fade away in time, since they are too expensive to implement. In the meantime, consumers still feel better, even if many of these big promises will never be implemented.

Interestingly, a large donor on the Democratic side, namely Tom Steyer, decided to enter the 2020 Presidential race last Tuesday. His Democratic opponents may be reluctant to criticize Steyer, since they still want his money – if they survive the primary process. Steyer is a big environmental activist and most famous for his opposition to the Keystone Pipeline, and other pipelines. This is a bit ironic, since the U.S. continues to flare massive amounts of natural gas in North Dakota, West Texas, and other regions due to a pipeline shortage. Furthermore, putting crude oil on railroads is expensive and dangerous, especially after the Lac-Megantic, Quebec tragedy, which killed 47 people in 2013. Had the U.S. suffered its own Lac-Megantic tragedy, there would be far less opposition to pipelines, which are a much safer way to transport crude oil and natural gas. In the meantime, crude oil rail car derailments are all too common all over the U.S., especially in the winter months when the rail tracks freeze and can shrink. Fortunately, most of our natural gas is shipped via pipelines in the U.S., but pipeline opposition continues, thanks to Tom Steyer.

President Trump has called Steyer “a crazed and stumbling lunatic,” so I suspect that the Presidential race has just become much more interesting. Steyer has also been leading the impeachment push for President Trump via his website. I expect that the news media will relentlessly cover Steyer’s campaign, since his outlandish comments will be great for ratings. In the event that Trump and Steyer ever debate each other, I suspect it will be the highest-rated debate ever and the Secret Service may have to intervene if it gets out of hand! Based on entertainment value alone, the 2020 race may be the most memorable in our lifetimes.

Fed Chair Powell is Now Clear About the Next Rate Cut

The biggest news last week was Fed Chairman Jerome Powell’s prepared statement on Wednesday before his semi-annual report to Congress, when he said that uncertainties “continue to weigh” on U.S. economic outlook and that the Fed “would act as appropriate to sustain an expansion.” Powell also made it clear that the economic outlook has not improved in recent weeks, which is a clear sign that a rate cut is coming.

I should add that since the Treasury yield curve has been inverted for over 30 days, the Fed wants to “un-invert” the yield curve, since it is bad for the banking industry, which the Fed regulates. Powell adds that “a number of government policy issues have yet to be resolved, including trade developments, the federal debt ceiling and Brexit.” He also seems worried about the lack of inflation, saying, “There is a risk that weak inflation will be even more persistent than we currently anticipate.” (Previously, he had signaled that inflationary pressure was “transitory.”) It is clear to me that the Fed intends to cut rates in an attempt to get inflation to reaccelerate to its 2% target based on the Personal Consumption Expenditure (PCE) index.

The inflation data came out late last week, confirming the Fed’s position. On Thursday and Friday, the Labor Department announced that the Consumer Price Index (CPI) and Producer Price Index (PPI) each rose 0.1% in June. In the past 12 months, the CPI and PPI have risen 1.8% and 1.7%, respectively, but the Fed follows the Personal Consumption Expenditure (PCE) index, which is up only 1.6% annually. Clearly there is not enough inflation or inflation expectations to keep the Fed from cutting rates on July 31.

About The Author

Louis Navellier
CHIEF INVESTMENT OFFICER

Louis Navellier is Founder, Chairman of the Board, Chief Investment Officer and Chief Compliance Officer of Navellier & Associates, Inc., located in Reno, Nevada. With decades of experience translating what had been purely academic techniques into real market applications, he believes that disciplined, quantitative analysis can select stocks that will significantly outperform the overall market. All content in this “A Look Ahead” section of Market Mail represents the opinion of Louis Navellier of Navellier & Associates, Inc.

Disclosures

Although information in these reports has been obtained from and is based upon sources that Navellier believes to be reliable, Navellier does not guarantee its accuracy and it may be incomplete or condensed. All opinions and estimates constitute Navellier’s judgment as of the date the report was created and are subject to change without notice. These reports are for informational purposes only and are not intended as an offer or solicitation for the purchase or sale of a security. Any decision to purchase securities mentioned in these reports must take into account existing public information on such securities or any registered prospectus.

Past performance is no indication of future results. Investment in securities involves significant risk and has the potential for partial or complete loss of funds invested. It should not be assumed that any securities recommendations made by Navellier. in the future will be profitable or equal the performance of securities made in this report.

Dividend payments are not guaranteed. The amount of a dividend payment, if any, can vary over time and issuers may reduce dividends paid on securities in the event of a recession or adverse event affecting a specific industry or issuer.

None of the stock information, data, and company information presented herein constitutes a recommendation by Navellier or a solicitation of any offer to buy or sell any securities. Any specific securities identified and described do not represent all of the securities purchased, sold, or recommended for advisory clients. The reader should not assume that investments in the securities identified and discussed were or will be profitable.

Information presented is general information that does not take into account your individual circumstances, financial situation, or needs, nor does it present a personalized recommendation to you. Individual stocks presented may not be suitable for you. Investment in securities involves significant risk and has the potential for partial or complete loss of funds invested. Investment in fixed income securities has the potential for the investment return and principal value of an investment to fluctuate so that an investor’s holdings, when redeemed, may be worth less than their original cost.

One cannot invest directly in an index. Results presented include the reinvestment of all dividends and other earnings.

Past performance is no indication of future results.

FEDERAL TAX ADVICE DISCLAIMER: As required by U.S. Treasury Regulations, you are informed that, to the extent this presentation includes any federal tax advice, the presentation is not intended or written by Navellier to be used, and cannot be used, for the purpose of avoiding federal tax penalties. Navellier does not advise on any income tax requirements or issues. Use of any information presented by Navellier is for general information only and does not represent tax advice either express or implied. You are encouraged to seek professional tax advice for income tax questions and assistance.

IMPORTANT NEWSLETTER DISCLOSURE: The hypothetical performance results for investment newsletters that are authored or edited by Louis Navellier, including Louis Navellier’s Growth Investor, Louis Navellier’s Breakthrough Stocks, Louis Navellier’s Accelerated Profits, and Louis Navellier’s Platinum Club, are not based on any actual securities trading, portfolio, or accounts, and the newsletters’ reported hypothetical performances should be considered mere “paper” or proforma hypothetical performance results and are not actual performance of real world trades.  Navellier & Associates, Inc. does not have any relation to or affiliation with the owner of these newsletters. There are material differences between Navellier Investment Products’ portfolios and the InvestorPlace Media, LLC newsletter portfolios authored by Louis Navellier. The InvestorPlace Media, LLC newsletters contain hypothetical performance that do not include transaction costs, advisory fees, or other fees a client might incur if actual investments and trades were being made by an investor. As a result, newsletter performance should not be used to evaluate Navellier Investment services which are separate and different from the newsletters. The owner of the newsletters is InvestorPlace Media, LLC and any questions concerning the newsletters, including any newsletter advertising or hypothetical Newsletter performance claims, (which are calculated solely by Investor Place Media and not Navellier) should be referred to InvestorPlace Media, LLC at (800) 718-8289.

Please note that Navellier & Associates and the Navellier Private Client Group are managed completely independent of the newsletters owned and published by InvestorPlace Media, LLC and written and edited by Louis Navellier, and investment performance of the newsletters should in no way be considered indicative of potential future investment performance for any Navellier & Associates separately managed account portfolio. Potential investors should consult with their financial advisor before investing in any Navellier Investment Product.

Navellier claims compliance with Global Investment Performance Standards (GIPS). To receive a complete list and descriptions of Navellier’s composites and/or a presentation that adheres to the GIPS standards, please contact Navellier or click here. It should not be assumed that any securities recommendations made by Navellier & Associates, Inc. in the future will be profitable or equal the performance of securities made in this report. Request here a list of recommendations made by Navellier & Associates, Inc. for the preceding twelve months, please contact Tim Hope at (775) 785-9416.

Marketmail Archives