by Bryan Perry

March 2, 2021

The past two weeks have proven to be turbulent for most asset classes, save for a few widely traded commodities like lumber, copper and oil. Heading into the final two trading days of February, bonds, gold and high P/E growth stocks all got crushed. Even Bitcoin shed 25% in its worst week in a year. The first two months of 2021 have been a wild ride, but a bullish one for those that can withstand huge price swings amid bouts of risk-off trading. That ride stalled out, at least temporarily, as the dollar stabilized.

Treasury Secretary Janet Yellen also poured cold water on cryptocurrency with her comments: “I don’t think that bitcoin…is widely used as a transaction mechanism,” she told CNBC’s Andrew Ross Sorkin at a New York Times DealBook conference. “To the extent it is used, I fear it’s often for illicit finance. It’s an extremely inefficient way of conducting transactions, and the amount of energy that’s consumed in processing those transactions is staggering.” Not quite the endorsement Bitcoin fans were looking for.

Coindesk GraphGraphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.

Diverting away from cryptocurrencies, Reddit short-squeezes and central bank manipulation of the dollar, euro, yen, pound sterling and yuan, there are forces outside the power of the Fed, other central banks, Congress, the IMF, EU and other influential global bodies of authority, that are out of their control, namely the global supply and demand curve of key commodities and the direction of the long end of the yield curve. Sure, the Fed may have a lock on holding short-term rates at or near zero, but the spike in the long end of the curve – the 10, 20 and 30-year maturities – trades on its own and has investors up at night.

30 Year Treasury Bond (STYX)

Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.

But, as with any economic recovery, interest rates and bond yields rise. Historically, it’s been a bullish development for stocks because the earnings rebound fueling the “risk on” appetite typically far exceeds that of the “risk off” fear of rising rates, and the market has to transition to this unfolding landscape.

To what extent inflation is being anticipated is the big question being asked this past week. The Fed’s goal of a 2% core inflation rate is being realized quickly, but at what point does $60 oil take gas prices north of $3 per gallon, or at what point does a sky-high lumber price, or roofing and other building material prices slow the pace of new construction in places like San Diego to a crawl as profits evaporate in an already super tight housing market where land acquisition costs are at a big premium?

Like it or not, investors are on commodity watch. I posted this same table of select commodity prices on February 9. In just the last three weeks, there are big spikes in the prices of crude oil, gasoline, heating oil, ethanol, palm oil, rubber, coffee, lumber, oats, cotton, cocoa, sugar, lean hogs, copper, lithium, platinum, steel, cobalt, aluminum, tin, nickel, molybdenum, iron ore, soda ash and rhodium.

Commodity Index

Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.

These three main commodity indexes are up an average 11.7% in the last month. The CRB Index closed out last week at 202.37 marking the highest level in a year, but in all reality, it only returned to normal levels prior to the pandemic. While certain select commodities like lumber are hitting new lifetime highs, most others are reverting back to previous levels prior to the global economic fallout from COVID-19.

CRB Index (Index Points)

Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.

This observation might tell us why the Fed sees the current wave of inflation as “transitory,” where the pace ebbs in the months ahead, as more supply comes online to address various shortages, but there is little doubt that the next set of inflation-related figures to be released the week of March 8 will again show a rise in core and non-core inflation, and the bond market may once again react negatively.

With that said, any fears of “hyperinflation” being fanned by some market bears seems overblown, at least at this time, until a longer pattern of price increases has been established. The hyper gains in technology will still act as a deflationary counterforce. We’ll need to see these spiking hard and soft commodity prices start to cool, going forward, to take some of the steam out of the inflation data.

Commodity Index1

Commodity Index2

Commodity Index3

Commodity Index4

Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.

In my view, the angst being exhibited by the market is overdone. The reflation trade and worldwide vaccine rollout is lifting most all boats. Since the stock market lives and breathes the direction of the U.S. 10-yr T-Note, it bears laying out where the inflection points are – which are pretty clear from this chart.

10 Year Treasury Note ($TNX)

Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.

The first resistance level of 1.5% has been breached, and the market had a hissy fit, even as the Atlanta Fed raised its Q1 GDP forecast to 9.5%. Why in the world would anyone not think bond yields wouldn’t tick higher with a GDP forecast this bullish being floated? High-flying stocks had to reset, but the market should absorb this initial pop in yields and head higher on brighter earnings prospects.

The next level round number of 2.0% will likely be challenged in the not-too-distant future as stronger employment data starts to cross the tape from widespread hiring within hotels, resorts, restaurants, bars, casinos, airlines, cruise lines, amusement parks, professional and collegiate sports venues, live concerts, movie theatres, live theatres all come back to full employment and operational capacity.

An additional move higher to 2.5% for the 10-year could simply result from a continuation of good things happening in the economy over the next three to four months in conjunction with initial and weekly stimulus checks going out, another whale-sized round of PPP loans being issued to small businesses, improving Covid data and more government spending in the form of a massive infrastructure package.

A move to 2.5% will also imply the bond market expects the Fed to yank forward its plans to taper QE. Considering that we’re only talking about a move higher of just 1.0% from current levels, that’s not much interest rate risk when one considers the equity rewards.

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

Please see important disclosures below.

Also In This Issue

A Look Ahead by Louis Navellier
Bonds Offer No Real Competition to Stocks

Income Mail by Bryan Perry
Staying the Course Amid the Volatility

Growth Mail by Gary Alexander
The Case for a Rapid Economic Rebound in 2021

Global Mail by Ivan Martchev
The Fed Would Love a 2% 10-Year Treasury

Sector Spotlight by Jason Bodner
Is the Stock Market Beginning to Crack?

View Full Archive
Read Past Issues Here

About The Author

Bryan Perry

Bryan Perry

Bryan Perry is a Senior Director with Navellier Private Client Group, advising and facilitating high net worth investors in the pursuit of their financial goals.

Bryan’s financial services career spanning the past three decades includes over 20 years of wealth management experience with Wall Street firms that include Bear Stearns, Lehman Brothers and Paine Webber, working with both retail and institutional clients. Bryan earned a B.A. in Political Science from Virginia Polytechnic Institute & State University and currently holds a Series 65 license. All content of “Income Mail” represents the opinion of Bryan Perry

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.