by Louis Navellier
March 11, 2025
The Commerce Department announced last Thursday that the U.S. trade deficit surged 34% in January to $131.4-million, the largest monthly increase ever recorded – ever since such data began being collected in 1992. Imports soared by 10% to $401.2-billion, while exports rose just 1.2% to $269.8-billion. Clearly, imports were surging as importers dumped their goods into the U.S. before tariffs took effect. Since the trade deficit impacts GDP calculations, that’s one big reason why economists lowered GDP estimates.
The President’s goal with his tariffs is to try to close our trade deficits with our biggest trading partners – especially those who export far more to us than they buy from us, often by erecting high tariff walls.
The Wall Street Journal recently documented that in 2024 our largest trade deficits were with China ($295-billion), Mexico ($172-billion), Vietnam ($123-billion), Ireland ($87-billion), Germany ($85-billion), Taiwan ($74-billion), Japan ($68-million), South Korea ($66-billion), Canada ($63-billion), Thailand ($46-billion), Italy ($44-million) and Switzerland ($38-billion). Since many of these deficits are incurred by U.S. technology companies establishing factories in some of these (primarily Asian) nations, the Trump Administration is pushing for more on-shoring, like Apple’s commitment to invest $500-billion over the next four years in the U.S. rather than Asia. Another example is that Taiwan Semiconductor plans to invest $100-billion in the U.S. to expand its chip production. Also, the U.S. auto industry will provide the Trump Administration with strong arguments not to disrupt their operations in Canada and Mexico.
While anxiety over punitive tariffs is likely holding back some consumers – and investors – from buying goods, services (and growth stocks for their portfolios), I want to assure you that I do not expect most of these tariffs to be inflationary, or permanent. On the inflationary front, the 10% tariffs that have been imposed on China are expected to be suppressed by Chinese deflation as well as by a weak Chinese yuan.
As for the bigger (25%) tariffs on our neighbors, the Canadian and Mexican tariffs were first postponed a month, and the other retaliatory tariffs will be effective on April 2nd, unless Commerce Secretary Howard Lutnick believes they need to be modified, or if Canada and Mexico can lower their tariffs before then.
I should add that Secretary Lutnick said on Bloomberg TV last Wednesday that the auto industry is not expected to be impacted by the 25% tariffs in Canada and Mexico, since the Big 3 are in compliance with the minimum U.S. content in their vehicles, so auto tariffs have been delayed by the Trump tariff team.
Another interesting tidbit is that after meeting with British Prime Minister Keir Starmer, President Trump was open to a free trade agreement with Britain, due largely to the fact that the U.S. had an $11.9-billion trade surplus with Britain in 2024. This essentially means that when Commerce Secretary Lutnick works on reciprocal tariffs with other countries, he will be looking to level the playing field with them.
Incoming German Chancellor Friedrich Merz has not been very friendly to the U.S., so I am not sure he will be able to convince German automakers to shift more of their manufacturing to the U.S., to take advantage of lower electricity as well as other costs to avoid any “tit for tat” tariffs with the U.S.
While the stock market has freaked out over the latest economic news, as well as implementation of tariffs on China, Canada and Mexico, the silver lining is that Treasury yields have plunged. As a result, many Fed watchers are expecting two more key interest rate cuts. I still expect four key interest rates cuts this year. Inflation in the euro-zone has cooled to a 2.4% annual rate (in February). Due to slower inflation and negative economic growth, I expect the Bank of England and European Central Bank (ECB) to make additional key interest rates cuts this year. These cuts are expected to cause U.S. Treasury yields to decline further, which in turn will cause the Fed to cut key interest rates four times this year.
The ECB cut its key rate by 0.25% to 2.5% last Thursday, then signaled that its easing phase is nearing its end, adding that, “Interest-rate cuts are making new borrowing less expensive for firms and households and loan growth is picking up.” The problem for Europe is that they are aging fast, and there is no net new household formation, except in Eastern European countries like Hungary and Poland with higher birth rates, so it is very hard for them to grow their respective economies.
Although Europe has had a lot of immigration, unfortunately these immigrants are not always assimilated well, which has caused a lot of unrest in Belgium, France and Germany, so I do not believe the ECB is recovering from recession and nearing the end of their rate cut cycle. The ECB has cut twice this year and I believe another three to four key interest rate cuts could be in store this year, since I do not expect that France and Germany will be able to pull out of their current recessions until interest rates collapse further.
Most U.S. Economic Indicators Seem to Be “On Hold” For Now
Most economic indicators seem to be “on hold” until the current tariff concerns reach some sort of clarity.
Last week, we learned that the Institute of Supply Management (ISM) announced that its manufacturing index slipped to 50.3 in February, down from 50.9 in January. The good news is that any reading over 50 signals an expansion, so the manufacturing sector has kept expanding for the second month in a row after contracting for 26-months. The bad news is that economists were expecting an ISM reading of 50.8 in February, so the ISM survey came in below expectations. One “green shoot,” however, was the suppliers deliveries component, which rose to 54.5 in February, up from 50.9 in January. So overall, there is some hope that the U.S. manufacturing sector will continue to improve, especially as the pace of U.S. on-shoring picks up. I should add that 10 of the 15 manufacturing industries surveyed reported expanding last month.
ISM also reported on Wednesday that its non-manufacturing (service) index rose to 53.5 in February, up from 52.8 in January and well above the economists’ consensus of 52.5. The new orders component rose to 52.2 (from 51.3 in January), as 14 of the 17 industries surveyed reported expansion in February.
Also on Wednesday, the Fed’s Beige Book survey was released in support of the next Federal Open Market Meeting (FOMC). It said that economic activity has risen slightly since mid-January, but eight of the 12 Fed districts reported flat to negative economic growth. The word “tariff” was mentioned 49 times in the Beige Book survey and created a lot of inflation uncertainty for the Fed. The bottom line is that more Fed rate cuts are in store. That will be confirmed by the next “dot plot” at the next FOMC meeting.
Then came the widely awaited jobs data for February. First, on Wednesday, ADP reported that only 77,000 private payroll jobs were created in February – the smallest monthly increase since last July, and only about half of the economists’ consensus expectation of a 148,000 increase. Interestingly, manufacturing and construction jobs rose, while education and healthcare jobs declined. Since there was a big drop in the Pacific region, it appears that the fires in Los Angeles region impacted the ADP report.
Then, on Friday, the Labor Department reported that 151,000 net new non-farm payroll jobs were created in February, slightly below the economists’ consensus estimate of 160,000. Also, January payroll jobs were revised lower to 125,000 (down from 143,000 first reported). The unemployment rate rose to 4.1%, up from 4% in January, and the worker participation rate declined to 62.4%, the lowest level in two years. Average hourly earnings rose by 0.3% (10 cents) to $35.93 per hour. The healthcare sector created 52,000 jobs last month, while federal government jobs declined by 10,000, likely due to Elon Musk and DOGE.
In the other big news last week, President Trump spoke before a joint session of Congress and told a sour-faced Democrat Party contingent that “America is back,” and to essentially get on board or get out of his way. Trump made it clear to the world that the U.S. will no longer be taken advantage of economically.
The President stated that reciprocal tariffs will commence on April 2nd. He praised a few companies (like Apple, Oracle and Softbank) for their on-shoring efforts and signaled that the tariffs will attract trillions of dollars in additional on-shoring. President Trump also praised Elon Musk and said that that the DOGE cuts will persist. Finally, President Trump said, “We need Greenland for national security and even international security, and we’re working with everybody involved to try and get it.”
Overall, President Trump’s first 40 days of “shock and awe” have caused Treasury bond yields to plunge, which in turn will cause the Fed to cut key interest rates. Right now, most economists expect two key interest rate cuts this year. However, since I expect a collapse in global yields, with the Bank of England and the European Central Bank cutting four to five times this year, I expect four key Fed interest rate cuts this year. The combination of strong forecasted earnings with more (four) Fed key interest rate cuts is effectively a “one-two punch” that should propel our fundamental superior stocks substantially higher!
Finally, the European Union (EU) reaffirmed its electric energy mandate that all internal combustion (ICE) vehicles would be banned in 2035. This was a bit surprising due to falling sales of electric vehicles (EVs) in the EU and the fact that the EU did not enforce massive fines on VW Group and other European car manufacturers for exceeding 2024 emissions. This just shows how out of touch the EU is, so the Trump Administration may see BMW, Mercedes and VW Group (Audi, Bentley, Bugatti, Lamborghini, Seat, Skoda, Porsche and VW) divert their manufacturing of ICE vehicles to the U.S.
Navellier & Associates; own Oracle Corp (ORCL), and Apple Inc. (AAPL), in some managed accounts. Navellier does not own Softbank Group (SFTBY), Honda Motors (HMC), Taiwan Semiconductor (TSM), or Volkswagen (VWAGY). Louis Navellier and his family own Apple Inc. (AAPL), in a personal account. They do not own Softbank Group (SFTBY), Honda Motors (HMC), Taiwan Semiconductor (TSM), Volkswagen (VWAGY), or Oracle Corp (ORCL), personally.
All content above represents the opinion of Louis Navellier of Navellier & Associates, Inc.
Also In This Issue
A Look Ahead by Louis Navellier
Most of the Trump Tariffs Will Not Be Inflationary or Permanent
Income Mail by Bryan Perry
Buy When There Is Tariff and DOGE-Cut “Blood in The Streets”
Growth Mail by Gary Alexander
The Magic Formula for Creating Budget Surpluses (Let’s Do It Again!)
Global Mail by Ivan Martchev
U.S. Stocks Are Ripe for a Rebound
Sector Spotlight by Jason Bodner
Are We in the Midst of a Bubble Mania (the Madness of Crowds)?
View Full Archive
Read Past Issues Here
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.
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 www.adviserinfo.sec.gov or by requesting a copy by emailing info@navellier.com. 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.