by Louis Navellier

October 19, 2021

I am sure that you have heard that the port bottlenecks and supply shortages have caused a shortage of everything from Halloween decorations to Christmas presents for kids, since toys are becoming scarce.

And, as if the toy shortage is not bad enough, California Governor Gavin Newsom just signed a law requiring large retailers to provide “gender-neutral” toy sections! Toys with “blue” and “pink” colors designed for boys and girls, respectively, are not to be sold in the gender-neutral toy section. This war on “Barbie” carries a $250 fine for the first violation and $500 fines for any subsequent violations!

Getting back to the real world, for proof that the supply chain disruption is not damaging the economy much, look no further than Friday’s report that retail sales rose 0.7% in September – a huge positive surprise, since economists were expecting a 0.2% decline. Fully 11 of the 13 sectors surveyed posted an increase in September. Sporting goods (including gun sales) rose an impressive 3.7% in September to lead all sectors. Excluding vehicles, gasoline, building materials, and food services, retail sales rose 0.8% in September and were revised up to an impressive 2.6% increase in August. In the past 12 months, retail sales have risen 13.9% (without inflation adjustments) and 5.4% after inflation adjustments. Apparently, economists were anticipating that retail sales would decline in September due to supply shortages, but since personal income is rising, consumers will continue to spend money, regardless of any shortages.

As a result of port bottlenecks and supply shortages, however, the International Monetary Fund (IMF) cut its global 2021 GDP forecast to 5.9% last Tuesday, down from 6% in its previous estimate. For 2022, the IMF is forecasting 4.9% global GDP growth. The IMF also noted that surging commodity prices have helped boost some emerging economies, while also acknowledging that many developing economies are being left behind as low Covid vaccination rates and higher energy prices impede their economic growth.

Order backlogs for major economies – like China, Germany, and the U.S. – remain very high, complicated by the Taiwan semiconductor chip shortage. On CNBC Squawk Box last Tuesday, Kyle Bass, who is the founder of Hayman Capital Management, said that it is “inevitable that Taiwan’s days are numbered.”

I disagree. I get a lot of questions about what is going to happen “when China takes over Taiwan” after tormenting the island nation an untold number of times with the Chinese air force invading Taiwanese airspace. My answer is that “China will not harm Taiwan’s infrastructure, since they need semiconductor chips, too!” This was reconfirmed by Chinese President Xi Jinping when he recently called for “peaceful reunification” with Taiwan. Not surprisingly, Taiwanese President Tsai Ing-wen said that Taiwan would not bow to Chinese pressure. If China did invade Taiwan, they would face a possible military reprisal as well as higher tariffs and sanctions from many other countries, so I respectively disagree with Kyle Bass.

China has its own economic problems. Based on the official Purchasing Managers Indexes (PMI), both its service and manufacturing sectors are now in a recession. Furthermore, the Trump Administration’s sanctions on 5G pioneer Huawei have severely hurt that firm, so its 5G market share is shrinking. Since the Biden administration did not lift or modify the Trump tariffs on China, if China invaded Taiwan, they not only risk a military reprisal, but also potentially higher tariffs; so my Taiwanese semiconductor companies, especially UMC, remain great near-term buys, since I do not expect China to invade Taiwan.

You may have noticed that my shipping companies consolidated after the crude oil pipeline break in California was blamed on a containership anchor dragging the pipe some 4,000 feet!  The ship guilty of this alleged anchor incident has not been identified, but I expect the entire shipping group will rebound strongly after resolution of these ongoing supply chain glitches. Like Britain, the U.S. also has an acute shortage of truck drivers, which just exacerbates the supply chain bottleneck.

Navellier & Associates does own Taiwan Semiconductor Manufacturing Co. Ltd (TSM), and United Microelectronics Corp. (ADS) (UMC) in managed accounts. Louis Navellier and his family own Taiwan Semiconductor Manufacturing Co. Ltd (TSM), and United Microelectronics Corp. (ADS) (UMC) personally via a Navellier managed account.

Inflation May Be Transitory, But It is Still Rising Sharply

The news on the inflation front looks bad, but I found many positive tidbits in the details of the reports. First, the Labor Department reported on Wednesday that the Consumer Price Index (CPI) rose 0.4% in September, which is a dramatic drop from the 0.9% surge in June. Food prices rose 0.9%, while energy prices rose 1.3%, so excluding food and energy, the core CPI rose only 0.2% in September. In the past 12 months, the CPI is up 5.4%, the highest 12-month run rate since 1991, while the core CPI is up 4.0%.

I found it interesting that the Labor Department report showed a chart of the CPI increase for the past 13 months to illustrate that the CPI is cooling off since its June surge. Essentially, this Labor Department chart was designed to make the argument that inflation is largely “transitory,” but due to a tight labor market and higher service costs, I expect wage price inflation to continue to remain elevated.

The next day, the Labor Department announced that the Producer Price Index (PPI) rose 0.5% in September. Wholesale food prices rose 2%, while energy prices rose 2.8%, the largest one-month increase since March. Excluding food, energy, and trade margins, the core PPI rose 0.2%, the smallest monthly increase this year. In the past 12 months, the PPI is up 8.6%, while the core PPI are running at an annual pace of 6.8%, so although the PPI rate is discouraging, there are some positive details in the core PPI rate.

Speaking of inflation, China’s National Bureau of Statistics announced that its producer price index (PPI) soared 10.7% in September compared with a year ago, as prices for coal, steel, and other commodities surged. In August, this rate was running at a 9.5% annual pace, so wholesale inflation is accelerating!  This is the highest pace in 26 years! As economic growth in China decelerates, inflation should cool, but so far there is no evidence of moderating inflation, especially since energy prices remain abnormally high.

Thanks to high inflation, Social Security benefits are expected to rise 5.9% in 2022, the highest annual increase in nearly 40 years. This boost in Social Security benefits should help consumer spending rise next year. It will be interesting if those benefits can offset the anger consumers feel over higher prices.

Also on Thursday, the Labor Department announced that weekly unemployment claims fell to 293,000 in the latest week, down from a revised 329,000 in the previous week. This is the first time weekly jobless claims fell below 300,000 since the pandemic began. Continuing unemployment claims declined to 2.593 million, down from a revised 2.727 million the previous week. Economists were expecting the figures to come in at 320,000 and 2.67 million, respectively, so both claims came in much better than expected.

Looking at the jobs data, I think it is safe to conclude that the Fed has met its unemployment mandate, so it can now turn its attention more fully to its other mandate, namely containing inflation.

All content above represents the opinion of Louis Navellier of Navellier & Associates, Inc.

Please see important disclosures below.


Marketmail Survey #9 is now closed.

Also In This Issue

Global Mail by Ivan Martchev
Bonds Hold the Key to the Stock Market

Sector Spotlight by Jason Bodner
Filter Out the Noise to Find the 4% “Outliers”

View Full Archive
Read Past Issues Here

Important 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 a 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.To the extent permitted by law, neither Navellier & Associates, Inc., nor any of its affiliates, agents, or service providers assumes any liability or responsibility nor owes any duty of care for any consequences of any person acting or refraining to act in reliance on the information contained in this communication or for any decision based on it.

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 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 holdings identified do not represent all of the securities purchased, sold, or recommended for advisory clients and 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 every investor. 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. Index is unmanaged and index performance does not reflect deduction of fees, expenses, or taxes. Presentation of Index data does not reflect a belief by Navellier that any stock index constitutes an investment alternative to any Navellier equity strategy or is necessarily comparable to such strategies. Among the most important differences between the Indices and Navellier strategies are that the Navellier equity strategies may (1) incur material management fees, (2) concentrate its investments in relatively few stocks, industries, or sectors, (3) have significantly greater trading activity and related costs, and (4) be significantly more or less volatile than the Indices.

ETF Risk: We may invest in exchange traded funds (“ETFs”) and some of our investment strategies are generally fully invested in ETFs. Like traditional mutual funds, ETFs charge asset-based fees, but they generally do not charge initial sales charges or redemption fees and investors typically pay only customary brokerage fees to buy and sell ETF shares. The fees and costs charged by ETFs held in client accounts will not be deducted from the compensation the client pays Navellier. ETF prices can fluctuate up or down, and a client account could lose money investing in an ETF if the prices of the securities owned by the ETF go down. ETFs are subject to additional risks:

  • ETF shares may trade above or below their net asset value;
  • An active trading market for an ETF’s shares may not develop or be maintained;
  • The value of an ETF may be more volatile than the underlying portfolio of securities the ETF is designed to track;
  • The cost of owning shares of the ETF may exceed those a client would incur by directly investing in the underlying securities; and
  • Trading of an ETF’s shares may be halted if the listing exchange’s officials deem it appropriate, the shares are delisted from the exchange, or the activation of market-wide “circuit breakers” (which are tied to large decreases in stock prices) halts stock trading generally.

Grader Disclosures: Investment in equity strategies involves substantial risk and has the potential for partial or complete loss of funds invested. The sample portfolio and any accompanying charts are for informational purposes only and are not to be construed as a solicitation to buy or sell any financial instrument and should not be relied upon as the sole factor in an investment making decision. As a matter of normal and important disclosures to you, as a potential investor, please consider the following: The performance presented is not based on any actual securities trading, portfolio, or accounts, and the reported performance of the A, B, C, D, and F portfolios (collectively the “model portfolios”) should be considered mere “paper” or pro forma performance results based on Navellier’s research.

Investors evaluating any of Navellier & Associates, Inc.’s, (or its affiliates’) Investment Products must not use any information presented here, including the performance figures of the model portfolios, in their evaluation of any Navellier Investment Products. Navellier Investment Products include the firm’s mutual funds and managed accounts. The model portfolios, charts, and other information presented do not represent actual funded trades and are not actual funded portfolios. There are material differences between Navellier Investment Products’ portfolios and the model portfolios, research, and performance figures presented here. The model portfolios and the research results (1) may contain stocks or ETFs that are illiquid and difficult to trade; (2) may contain stock or ETF holdings materially different from actual funded Navellier Investment Product portfolios; (3) include the reinvestment of all dividends and other earnings, estimated trading costs, commissions, or management fees; and, (4) may not reflect prices obtained in an actual funded Navellier Investment Product portfolio. For these and other reasons, the reported performances of model portfolios do not reflect the performance results of Navellier’s actually funded and traded Investment Products. In most cases, Navellier’s Investment Products have materially lower performance results than the performances of the model portfolios presented.

This report contains statements that are, or may be considered to be, forward-looking statements. All statements that are not historical facts, including statements about our beliefs or expectations, are “forward-looking statements” within the meaning of The U.S. Private Securities Litigation Reform Act of 1995. These statements may be identified by such forward-looking terminology as “expect,” “estimate,” “plan,” “intend,” “believe,” “anticipate,” “may,” “will,” “should,” “could,” “continue,” “project,” or similar statements or variations of such terms. Our forward-looking statements are based on a series of expectations, assumptions, and projections, are not guarantees of future results or performance, and involve substantial risks and uncertainty as described in Form ADV Part 2A of our filing with the Securities and Exchange Commission (SEC), which is available at or by requesting a copy by emailing All of our forward-looking statements are as of the date of this report only. We can give no assurance that such expectations or forward-looking statements will prove to be correct. Actual results may differ materially. You are urged to carefully consider all such factors.

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 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.

FactSet Disclosure: Navellier does not independently calculate the statistical information included in the attached report. The calculation and the information are provided by FactSet, a company not related to Navellier. Although information contained in the report has been obtained from FactSet and is based on sources Navellier believes to be reliable, Navellier does not guarantee its accuracy, and it may be incomplete or condensed. The report and the related FactSet sourced information are provided on an “as is” basis. The user assumes the entire risk of any use made of this information. Investors should consider the report as only a single factor in making their investment decision. The report is for informational purposes only and is not intended as an offer or solicitation for the purchase or sale of a security. FactSet sourced information is the exclusive property of FactSet. Without prior written permission of FactSet, this information may not be reproduced, disseminated or used to create any financial products. All indices are unmanaged and performance of the indices include reinvestment of dividends and interest income, unless otherwise noted, are not illustrative of any particular investment and an investment cannot be made in any index. Past performance is no guarantee of future results.