by Louis Navellier

February 22, 2023

We’re coming up to the one-year anniversary of Russia’s invasion of Ukraine this week (on February 24). The sanctions against Russian oil, although well-intended, can sometimes backfire, as sanctions often do. Essentially, Western nations that impose sanctions on Russia also allow Russian oil to be transferred at sea to insured vessels, so a shadow fleet of tankers has been assembled by Russia to do these transfers at sea to keep selling its heavy sour crude, despite a $60 price cap and strict financial sanctions.

If Russia dares to stage a second, stronger invasion of Ukraine this spring, who knows if the West will become more serious about enforcing these sanctions more consistently among these third-party nations.

As Europe strives to end its reliance on Russian crude oil, the future does not look good for Russia. Essentially, Russia does not have storage facilities – like a Cushing Oklahoma-type facility or a Strategic Petroleum Reserve (SPR) – to store its crude oil. As a result, as its export markets collapse, Russian oil starts to back up in pipelines, effectively forcing many Russian wellheads to be shut. Even worse, if crude oil stops moving through Russia’s Arctic pipelines, the contents in the pipeline can freeze and create huge damage, which means that if the wellheads are capped, then the pipelines may suffer irreparable damage.

To put this in perspective, Exxon-Mobil helped Russia’s Rosneft develop their massive Kara Sea discovery in the Arctic Ocean over a decade ago. Rosneft also undertook successful Arctic explorations with Italy’s Eni and Norway’s Equinor, but Exxon-Mobil’s cooperation with Rosneft ended after Russia invaded Crimea in 2014. Equinor transferred its assets to Rosneft in 2022 and Eni halted buying natural gas from Gazprom in late 2022. As these and other Western countries stop buying Russian crude oil and natural gas, Russia is becoming increasingly isolated. Furthermore, Western technical expertise to operate wellheads and pipelines in extreme Arctic conditions has vanished, which means that Russia is going to continue having a hard time maintaining its energy facilities, especially due to equipment sanctions.

Already Russia’s crude oil production has been reduced by about 1.5 million barrels a day vs. a year ago. Due to wellheads and pipeline complications in the Arctic, another 3-5 million barrels a day of Russian crude could disappear in the upcoming months. Russia is the world’s second largest crude oil producer after North America (Canada and the U.S.). For OPEC, Brazil, and other countries to make up for Russia’s lost crude oil production is problematic, so my prediction that crude oil will rise to $100 per barrel in the spring is now unfolding and $120 per barrel for Brent light sweet crude during the summer peak is likely.

In addition, Belarus and Russia account for 41% of global potash fertilizer production, but sanctions are now restricting exports. Furthermore, Russia accounts for about 15% of global nitrogenous fertilizer exports, which make products like ammonia and urea. So essentially, global food production is now at risk due to sanctions against Belarus and Russia. As a result, food prices may remain high in the upcoming months.

Sadly, the Biden Administration is still playing politics with our Strategic Petroleum Reserve (SPR). Last Wednesday, The Wall Street Journal reported that U.S. crude oil exports hit a record 5.1 million barrels per day in the week ending on October 21, 2022, but that was boosted by continuing releases from the SPR. In addition, open interest for West Texas Intermediate (WTI) contracts are now at a record high due to U.S. exports and high tanker traffic in the Gulf of Mexico. WTI crude is cheaper than the Brent sweet crude, but more refineries around the world are increasingly set up to refine WTI crude. The bottom line, according to the Journal, is that U.S. crude oil exports are increasingly influencing global crude oil prices.

Partly due to these political moves, the Energy Information Agency (EIA) reported on Wednesday that U.S. crude oil inventories rose by 16.3 million barrels in the latest week, which is the eighth week in a row that crude oil inventories have risen. I should add that crude oil inventories are now 8% higher than they have been historically this time of year. Also, the EIA said the U.S. will soon sell another 26 million barrels from the SPR, but since Congress has overwhelmingly voted to ban sales to China, I am not sure it is wise for any additional SPR releases while inventories remain so high. Maybe Congress can intervene.

Inflation and Retail Sales Dominated Last Week’s News

Last week was a big one for economic news. First, on Tuesday, the Labor Department announced that the Consumer Price Index (CPI) rose 0.5% in January and 6.4% in the past 12 months. The biggest news was that “Owners’ Equivalent Rent” rose an unexpectedly high 0.7% in January and 7.9% in the past year, and the overall housing and shelter category accounted for about half of the January CPI increase.

Economists were expecting the overall and core CPI to rise by just 0.4% and 0.3%, respectively, so this was a big disappointment. Although the 12-month rate has declined for seven straight months, the details were disappointing, so the Fed will continue to raise key interest rates in an attempt to squelch inflation.

On Thursday, the Labor Department reported that the Producer Price Index (PPI) rose 0.7% in January and 6% in the past 12 months. The core PPI, excluding food, energy, and trade margins, rose 0.6% in January and 4.5% in the past 12 months. The core index is up sharply from a 0.2% increase in December.

In between those two inflation reports, the Commerce Department on Wednesday shocked everyone by declaring that retail sales surged 3% in January, substantially above economists’ consensus estimate of a 1.9% gain. An 8.7% increase in Social Security checks to 70 million recipients likely helped boost consumer spending as well as positive seasonal adjustments. Spending at bars and restaurants soared 7.2%, likely aided by milder winter weather. Auto sales soared 5.9% and furniture store sales rose 4.4%. Sales at electronics and appliance stores rose 3.5%. Every major retail sales category reported sales gains.

In the wake of this stunning January retail sales report, most economists will be revising their first-quarter GDP estimates higher. (Currently, the Atlanta Fed is estimating 2.5% annual first-quarter GDP growth.)

And finally, the Labor Department on Thursday reported that weekly jobless claims declined in the latest week to 194,000 vs. a revised 195,000 the previous week. Continuing unemployment claims increased to 1.696 million in the latest week vs. 1.680 million the previous week, so the job market remains healthy.

Navellier & Associates owns Exxon Mobil Corp. (XOM) in managed account.  Louis Navellier and his family own Exxon Mobil Corp. (XOM) via a Navellier managed account.

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

Please see important disclosures below.

Also In This Issue

A Look Ahead by Louis Navellier
The Global Vise Tightens on Russia

Income Mail by Bryan Perry
Mounting Confusion About What Lies Ahead

Growth Mail by Gary Alexander
Explain This! Flat GDP + Market Crash = Soaring Tax Revenues!

Global Mail by Ivan Martchev
The Bond Market Now Looks to the Fed

Sector Spotlight by Jason Bodner
What Does an “Overbought” Market Mean?

View Full Archive
Read Past Issues Here

About The Author

Louis Navellier

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.

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.